How long does foreclosure take?
Home foreclosures can take a few months or years depending on state laws
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Every three months, 250,000 American families enter into foreclosure throughout the United States, according to data compiled from the Mortgage Bankers Association.
Despite how life-altering it can be, not every state allows foreclosures on properties to happen right away. In fact, some states may be more lenient to homeowners or the agency that issued the home loan.
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Here is how long foreclosure can take under certain circumstances, according to real estate and legal experts.
What is foreclosure?
Foreclosure Home For Sale Real Estate Sign in Front of a house. (iStock)
Foreclosure is a legal process where lenders attempt to recover an unpaid balance from borrowers who have stopped making payments on their home loans. Lenders will seize the home, which is typically used as collateral for the loan and will put the property up for sale to try and recoup losses.
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“The foreclosure process from beginning to end typically takes a lender about 18 months to foreclose on a property during normal times. In these unusual times it will likely take a lender much longer,” said David Reischer, an attorney, agent, broker and CEO of LegalAdvice.com. “Typically the industry recognizes 1 x 120 [120-day late payment] or 4 months as ‘legal default,’ at which point the lender begins the foreclosure process by filing a Notice of Default.”
He added that state laws vary on the filing of a Notice of Default, however, a non-judicial foreclosure process officially begins when the trustee files a Notice of Default at the county recorder's office.
Borrower-friendly state vs. Lender-friendly state
A man and woman overwhelmed with past-due bills and debt. (iStock)
Since each state has its own foreclosure laws, there are some that are friendlier to borrowers and some that are friendlier to lenders.
“In states that are lenient with borrowers, the foreclosure process can take up to three years from the date the borrower stopped making payments,” said Sean Moudry, a real estate analyst at theClose.com. “States with strict foreclosure laws can take as little as six months.”
Although a state’s laws may lean in favor of a lender or borrower, it is not absolute, according to Jim Angleton, the president of AEGIS FinServ Corp – a global financial and business intelligence company.
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“[Borrower] friendly is really not so friendly. It comes with the same enforcement but is tweaked slightly adding more time to the overall process for foreclosure,” Angleton explained. “Understand post successful foreclosure, there can be a 30- to 45-day process to reclaim by paying all past due foreclosure fees, depending on the state, and it is identified in many ways.”
“A lender friendly state is anything but friendly and is geared towards favored laws, rules and regulations for the lender as opposed to the above-mentioned instruments,” he added. “These offer swift court processes and the only hold up for both mentioned is if the borrower enters in bankruptcy, which completely changes the tone and tenor of foreclosure. It is the ultimate last act to save your castle.”
Which states have the longest foreclosure process?
Leaning foreclosure sign in front of a modern single-family home on a cloudy day. (iStock)
There are 10 U.S. states that have been identified as having the longest foreclosure timelines on average, according to the multi-sourced national property database ATTOM Data Solutions.
As of the third quarter of 2019, the following states have recorded timelines that are more than two years long on average.
- Pennsylvania: 914 days.
- Oklahoma: 950 days.
- Washington: 1,002 days.
- New York: 1,003 days.
- Florida: 1,138 days.
- Georgia: 1,170 days.
- New Jersey: 1,173 days.
- Nevada: 1,511 days.
- Hawaii: 1,626 days.
- Indiana: 1,633 days.
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Which states have the shortest foreclosure process?
A woman packing away belongings. (iStock)
Similarly, but on the other end of the spectrum, ATTOM Data Solutions has identified 10 U.S. states that have the shortest foreclosure timelines on average.
As of the third quarter of 2019, the following states have recorded timelines that are mostly under a year. Only West Virginia offers some wiggle room with a year and 20 days.
- West Virginia: 385 days.
- Minnesota: 354 days.
- Wyoming: 321 days.
- Arkansas: 318 days.
- New Hampshire: 292 days.
- Oregon: 283 days.
- Alaska: 258 days.
- Mississippi: 229 days.
- Montana: 217 days.
- Virginia: 201 days.