What Is Foreclosure?

Foreclosure is the process by which a lender attempts to reclaim the balance of a mortgage on a property after you have become delinquent on the payments.

It doesn't matter why you missed the payments - a death in the family, temporary job loss, unexpected expenses; medical problems... The bank isn't concerned with why the loan is in default, only that they aren't getting their payments.

When you miss up to three payments on the mortgage, the lender will file a notice to foreclose through the county legal system. This is sometimes known as a Notice of Default, or "Lis Pendens". The lender's attorneys will prepare the petition and file it with the county. At this point, your name, address and all the other information pertaining to the proceedings become public record.

If you can't save the house, then it gets sold at a public auction, usually at a deep discount and the high bidder becomes the new owner of your home. If the house sells for anything above the loan amount, then the excess goes to all juionr lien holders and if there's anything left after that, you. It can happen that you get a little cash from the auction, but you'd never get the equity they spent years building. If the house doesn't sell at the auction, then it is repossessed by the lender and will be listed on the open market by the lender's real estate agents. At that point, the foreclosure has occurred, you lose the house and all your equity, and your credit will be severely damaged, if not destroyed, for years to come.

However, if you're able to work out the problem with the lender or sell the house, then you can save your credit, and possibly the house. At the very least, selling the house allows you to make a clean break, getting out of the negative situation with a chance to salvage your credit and start over. It's important to know that up until the date of the auction, you still own the house and can save or sell it to beat the foreclosure!

Depending on the state and county, a foreclosure process can take a couple months, or merely weeks. Time restraints by the lender could force you to make a decision that you wouldn't make otherwise. However, there are options to giving up your equity and walking away from your home.

Kansas Foreclosure Law
The laws vary between Kansas and Missouri. In Kansas, the foreclosure process is handled through the court system, and you will be served with a court summons. Once you've been served, your house will be sold at public auction in about 2 to 3 months.

Once the house is sold at auction, you have a period of 90 days to redeem the property for the full amount of the auction price. During the redemption period, the mortgage will still accure daily interest and fees, so redemption costs increase until the property is redeemed. Once that 90 days is passed the lender will begin the eviction process, then put the property on the open market.

Missouri Foreclosure Law
In Missouri, a homeowner is given almost no time to react to a foreclosure. Once the lender files foreclosure, they will sell the house at public auction in as little as 20 days!

Once the house is sold at auction the lender will begin the eviction process, then put the property on the open market.

Unlike Kansas, a homeowner is not automatically entitled to redemption rights. A bond must be posted with a letter of intent stating that the homeowner intends to redeem the property. Once that occurs, the homeowner may have up to one year to redeem the property. During the redemption period, the mortgage will still accure daily interest and fees, so redemption costs increase until the property is redeemed.

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