Homeowner Occupancy Following a Foreclosure

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When you get a foreclosure notice, it means you will be losing your home if you can't afford to pay your loan current. It doesn't, however, mean that you need to start moving that day. While state laws vary, you will usually have a period measured in weeks or months before you have to be out of your house.

From Notice to Foreclosure

Once you get your notice, the foreclosure process starts in earnest. Depending on your state's laws, your lender will either use a court proceeding or will do a nonjudicial foreclosure that usually requires an advertisement in the local newspaper. Judicial foreclosures frequently take months, with processes extending past six months not uncommon. States with nonjudicial foreclosures move more quickly, but still require at least a month. According to RealtyTrac, the only states where the foreclosure process takes 60 days or less are Alabama, Georgia, Maryland, Michigan, Missouri, New Hampshire, Texas, Virginia, Wyoming and the District of Columbia.

From Foreclosure to Sale

Once your property is foreclosed, it gets sold to the highest bidder at sheriff's sale, with the proceeds going to your lender. Organizing the sale usually requires some time for advertising and notification. As with foreclosure time periods, the amount of time between the foreclosure and the sale varies by state. It could take as little as one week to a few months between your foreclosure and the sale.

Redemption Period

Some states have a redemption period after the foreclosure sale. If you live in one of those states, you will have a predetermined amount of time to pay your mortgage current and redeem your property. Even if you can't bring your mortgage current, you may be able to stay in your house for free during the redemption period.

After Redemption or Sale

After the sale or the redemption period, you technically become a tenant. This means that, if you haven't already left, the owner of the home will need to evict you. Typically, the process starts with a notice that vacates your tenancy and can escalate into a formal eviction through a court. How quickly these notices come varies depending on who ends up owning your home and how fast they move. However, if you stay until you are formally evicted, you might find it hard to find replacement rental housing.

Negotiating a Settlement

At any point in the process, you can also negotiate a settlement with your lender or with the party that buys your house in the foreclosure sale. You might be able to negotiate living in the house rent-free in exchange for a promise not to damage it or, if you prefer, you may even be able to rent it back by paying a fair market rent. The new owner of the house might even pay you to leave so that she won't have to evict you.