You can usually stop foreclosure right up to the point when your home goes to auction. According to federal law, banks and lending institutions can’t officially begin the foreclosure process until you’re 120 days late on payments. However, if you don’t act swiftly you’ll have fewer options for stopping foreclosure and circumstances will ultimately force your hand.
Foreclosure is any homeowner’s worst fear. Despite that, know that you have options even when things seem hopeless. Here, we’ll help you understand when it’s too late to stop foreclosure in more detail and arm you with information that could save your home. Let’s get right to it!
How Much Time Do You Have to Stop Foreclosure?
How long you have to stop foreclosure depends on where you live and the type of foreclosure you’re facing. Let’s look at some of the factors that influence how long foreclosure takes so you can gauge how long you’ll have to stop it!
Mortgage Foreclosures
If you’ve defaulted on your mortgage, your banking institution can move to auction your home off in hopes of recovering the financing they gave you. Banks are legally required to wait at least 120 days before they can begin the foreclosure process. In general, it typically takes between six and 18 months for a mortgage foreclosure to take place.
Tax Lien and Tax Deed Foreclosures
If you’re behind on your property taxes, your municipality could foreclose on your home to recover those taxes. This is called a tax deed foreclosure or a tax lien foreclosure depending on your state.
- A tax deed foreclosure more closely resembles a mortgage foreclosure: the government sells the property directly to an investor if the homeowner doesn’t pay the property taxes. This means someone could buy your home at that public auction and become the new legal owner.
- A tax lien foreclosure is slightly more complicated. If you haven’t paid your property taxes, your local government can place a lien on your home until you pay your taxes. You’ll have a period of time when you can pay those taxes, but if you don’t do so, your local government can sell the lien to an investor. At that point, you owe payment to the investor, who can otherwise foreclose on your home like a bank would.
Tax lien and deed foreclosures can take as long as several years, but that doesn’t mean you should wait around. If you’re facing foreclosure, take action as soon as you can.
Property Tax Foreclosure Type by State
State |
Tax Deed or Tax Lien Foreclosure |
Wisconsin |
Tax deed |
Michigan |
Tax deed |
Illinois |
Tax lien |
Indiana |
Tax lien |
Ohio |
Mixed — both tax lien and tax deed |
Judicial vs. Non-Judicial Foreclosure
Judicial and non-judicial foreclosure are two different ways that foreclosure is enforced. The duration of the foreclosure process will depend on what process your state uses.
In a judicial foreclosure, the lender takes legal action against you in court. The court supervises the process, issues a foreclosure judgment, and your home is then sold at a public auction to pay off the debt. Because the courts are involved, judicial foreclosure typically takes longer.
Conversely, non-judicial foreclosure is faster and less expensive because it doesn’t involve the court system. Instead, the lender follows a process laid out by state law. The lender will send you notices of default, publish a notice of sale in a local newspaper, and hold a public auction to sell your home.
Foreclosure Type by State
State |
Tax Deed or Tax Lien Foreclosure |
Wisconsin |
Judicial |
Michigan |
Non-judicial |
Illinois |
Judicial |
Indiana |
Judicial |
Ohio |
Judicial |
How to Stop Foreclosure
If there’s a silver lining to the prospect of foreclosure, it’s knowing that nobody wants foreclosure. Not you. Not the bank. Not the court or municipality. Foreclosure is a long, tiring process for everyone involved, and there’s never a true winner. Banks have to spend on legal fees and lose out on payments, and homeowners like you are exposed to the stress of needing to find a new home.
If you’re facing foreclosure, it’s essential to take action as early as you can to stop it. Let’s take a look at some of the best ways to stop foreclosure.
1. Change Your Loan Terms
If you’ve recently fallen behind on mortgage payments or know that you’re about to, talk to your lender right away. You may be able to work out a new payment plan or update the terms of your mortgage to make it easier to manage.
This can stop you from ever facing foreclosure in the first place, and could help you avoid significantly damaging your credit score.
2. Sell Your House
Selling your home will stop the foreclosure process, but it’s not always easy or the best decision. There are three main ways you would sell your home if you’re facing foreclosure, so let’s take a quick look at those:
- Selling with a short sale: A short sale is when you sell your house for less than what you owe on your mortgage with the bank’s permission. For example, let’s say your house is worth $150,000, but you owe $200,000. You can ask the bank to approve the sale for the lower amount. If the bank is on board with that, you can sell your house for a lower amount, and the bank gets paid some of the money owed instead of nothing. Short sales can be complicated and take a long time, but they can help you if you’re struggling with your mortgage payments.
- Selling to a cash-for-homes company: Cash-for-home investors typically offer a cash price below market value. These sales can move quickly, which can be helpful if you’re nearing a foreclosure auction. However, the investor has all the leverage in the negotiations, which all but guarantees that you’ll receive much less than the home is worth.
- Selling your home traditionally: Having a traditional home sale is one of the best strategies if you know you won’t be able to afford your home anymore. Putting your home on the open market will garner a higher selling price than your other selling options. However, due to the time it takes, you’ll need to pursue this strategy promptly.
3. File for Bankruptcy
Filing for bankruptcy is a sure way to stop the foreclosure process—but it comes at an extreme cost. It leaves a mark on your credit score that will stay there for seven to ten years depending on how you file for bankruptcy. This will make it incredibly difficult to secure financing in the future.
4. Sale-Leaseback with SKYDAN
If you have equity in your home, you may qualify for SKYDAN’s Sale-Leaseback program. With our program, you can receive a lump sum for the equity you’ve built in your home and settle your outstanding debts, all while staying in your home.
We’re not a traditional lender. That means we don’t care about your credit score, debt-to-income ratio, or income. If you have equity in your home, you may qualify for SKYDAN’s Sale-Leaseback program. Here’s how it works:
Want to learn more? See what our customers have said, or get started today by seeing if you qualify!