When is it too late to stop foreclosure?

How does foreclosure move, stage by stage?

Foreclosure follows state law. Some states run it through a court, where you can raise defenses (judicial foreclosure). Others let the lender foreclose without a court action, through required written notices under a "power of sale" clause in the mortgage or deed of trust (non-judicial foreclosure). The stages below show the general shape. CFPB

The federal rules below apply to most mortgages on a house that is your principal residence (12 CFR 1024.30(c)(2)). Small servicers and reverse mortgages are exempt from many of them (12 CFR 1024.30(b)). Small servicers must still follow the 120-day rule (12 CFR 1024.41(j)).

Stage 1: A missed payment

After you fall behind, your servicer must try to contact you within the first 36 days. It must send a written notice about options to avoid foreclosure no later than 45 days after you fall behind. CFPB

Options still open: almost all of them. The CFPB lists refinancing, a loan modification, a repayment plan, forbearance, a short sale, and a deed in lieu of foreclosure as options a servicer might offer. You can also sell the house. CFPB

Stage 2: The 120-day pre-foreclosure period

A servicer generally cannot make the first notice or filing for a foreclosure until the loan is more than 120 days delinquent. The exceptions are narrow, such as a foreclosure based on a due-on-sale clause. 12 CFR 1024.41(f)(1)

This is a strong time to apply for loss mitigation. Loss mitigation is the term for options that help you keep the house or leave it without a foreclosure. If you send a complete application during this period, the servicer cannot make the first filing until one of three things happens: it decides you are not eligible and any appeal ends, you reject all the options it offers, or you do not perform under an agreed option. 12 CFR 1024.41(f)(2)

Options still open: loan modification and other loss mitigation, catching up, refinance, sale, short sale, and deed in lieu.

Stage 3: Notice of default or lis pendens

Here the formal process starts. Judicial and non-judicial states split at this point. CFPB

• Judicial states. The lender files a lawsuit. A notice of lis pendens is often recorded. It is a public record that the lawsuit affects the property. In Florida, for example, a lawsuit has that effect only once a notice of lis pendens is recorded in the county's official records (Fla. Stat. 48.23).
• Non-judicial states. The process moves through required written notices (CFPB). The first formal notice has different names in different states, such as a notice of default.

Options still open:

• Reinstatement. You bring the loan current. If the loan has been accelerated (the full balance called due), the lender generally can require the full past-due amount (CFPB). Costs can be added. In Florida, the amount to cure includes the lender's reasonable foreclosure expenses and attorney's fees (Fla. Stat. 45.0315).
• Loan modification and loss mitigation. Submit a complete application more than 37 days before a foreclosure sale. The servicer then cannot move for a foreclosure judgment or order of sale, or conduct the sale, until the application is resolved as in Stage 2 (12 CFR 1024.41(g)).
• Sale, short sale, or deed in lieu. See selling before the auction below.
• Bankruptcy. See the bankruptcy section below.

Stage 4: Notice of sale

At this stage, a sale date is set. Florida is one judicial example. There, the final judgment sets a public sale not less than 20 days or more than 35 days after the judgment. The sale can be later if the lender consents. Fla. Stat. 45.031(1)(a)

The 37-day line matters most here. If your servicer receives a complete application more than 37 days before the sale, it must evaluate you for all available options within 30 days (12 CFR 1024.41(c)(1)). If the application arrives later, the servicer does not necessarily have to review it under these rules (CFPB). The protection generally covers one complete application. A servicer does not have to repeat it if you have stayed delinquent since an earlier complete application it already handled (12 CFR 1024.41(i)).

If you are in a trial loan modification and make the trial payments on time, your servicer may not complete the foreclosure sale. CFPB

Options still open: reinstatement or full payoff, loss mitigation if the 37-day line has not passed, a sale that can close before the sale date, a short sale if the lender approves in time, and bankruptcy.

Stage 5: The foreclosure sale (auction)

After the required steps, a public auction of the house generally is held. The buyer at the sale can be your lender. For most people, this is the point where it becomes too late to stop the foreclosure. CFPB

Options still open: before the sale, the options in Stage 4. After the sale, only what your state allows in Stage 6.

Stage 6: Confirmation or redemption period

Some states add a step after the sale. Others do not.

• Florida (judicial). You can redeem by paying the amount in the judgment until the later of two points: the clerk files the certificate of sale, or the time set in the judgment. Otherwise, there is no right of redemption (Fla. Stat. 45.0315). Parties then have 10 days to object to the sale. If no one objects, the clerk files a certificate of title (Fla. Stat. 45.031(5)).
• Michigan. For residential property of up to 4 units, the redemption period is 6 months if more than 66-2/3% of the original loan was still owed at the notice of foreclosure. It is 1 month if the property is found abandoned. Where no other rule applies, it is 1 year from the sale. To redeem, you pay the amount paid at the sale, plus interest and certain fees (MCL 600.3240).

Options still open: redemption, where your state allows it. A sale during a redemption period may be possible in some states, but it is complex. Ask an attorney in your state first.

Stage 7: Eviction

In every state, you have the right to stay in the house during the entire foreclosure process. In some states, you may have to leave a few days after the sale. In others, you may not have to move for months. CFPB

Options still open: at this stage, the focus usually shifts to the move. A housing counselor or a legal aid office can explain your rights in your state.

Which options are still open at each stage?

Can you still sell your house before the auction?

Yes, in most cases. Until the sale, you can usually still sell the house. The sale must pay off the loan, or the lender must agree to take less.

• The price covers what you owe. The loan is paid off at closing. Paying the amount owed before the sale can prevent the foreclosure sale. Florida law says this directly (Fla. Stat. 45.0315).
• The price does not cover what you owe. The sale needs the lender's agreement as a short sale. A short sale is a type of loss mitigation, and you leave the house when it closes. In some states, a lender can sue for the shortfall, so ask for a written waiver of the deficiency (CFPB).
• A deed in lieu. You voluntarily give the house to the lender. Make sure it covers the entire amount you still owe (CFPB).

How does a cash sale fit?

Timing is often the hard part of a sale before an auction. A cash buyer does not need a mortgage approval to buy, so a cash sale can often close sooner than a financed sale. If a sale date is set, tell the buyer and the title company on the first day.

Propcash is a direct cash buyer that buys houses as-is and can close in as few as 7 days. You deal with the buyer itself, from the first call to closing. It makes one data-backed cash offer, with no obligation, and charges no fees, commissions, or closing costs to the seller. A cash sale is one option among several. If you want to keep the house, talk to your servicer and a housing counselor first.

For a full walk through the sale itself, read our guide to selling a house in foreclosure. For an overview of selling when you are behind on payments or in foreclosure, see selling a house in foreclosure or behind on payments.

Can bankruptcy stop foreclosure?

Yes, usually for a time. Filing a bankruptcy petition creates an automatic stay. The stay stops the continuation of court actions against you and any act to enforce a lien against property of the estate. That generally pauses a foreclosure, including a scheduled sale. 11 U.S.C. 362(a)

The stay has limits:

• A lender can ask the court for relief from the stay for cause, such as lack of adequate protection of its interest (11 U.S.C. 362(d)(1)).
• If you had 1 case dismissed in the past year, the stay ends on the 30th day after the new filing, unless the court extends it (11 U.S.C. 362(c)(3)).
• If you had 2 or more cases dismissed in the past year, the stay does not take effect when you file (11 U.S.C. 362(c)(4)).

Chapter 13 can do more than pause. A plan can cure a default within a reasonable time while you keep up regular payments (11 U.S.C. 1322(b)(5)). A default on your principal residence can be cured this way until the house is sold at a foreclosure sale held under state law (11 U.S.C. 1322(c)(1)). Plans generally run up to 3 years or up to 5 years, depending on income (11 U.S.C. 1322(d)). A bankruptcy attorney can tell you if this fits your situation.

Get a cash offer, with no obligation

If selling is one of the paths you are thinking about, you can request a cash offer from Propcash. Propcash is a direct cash buyer that buys houses as-is and can close in as few as 7 days. The offer is free, and there is no obligation. You can take your time and compare it with the options from your servicer.

For free help with your situation, talk to a HUD-approved housing counselor. You can also search by location with the CFPB's counselor finder, or talk to an attorney in your state.