Basic Foreclosure Fees & Costs

When homeowners default on their mortgages and enter foreclosure, costs related to this situation begin to add up quickly. With several missed mortgage payments in a row, a lender's foreclosure efforts normally lead to additional fees and expenses. In the days leading up to a foreclosure sale, homeowners who want to reinstate their mortgages usually face an enormous bill. The costs incurred by the lender to foreclose defaulting borrowers typically add up to tens of thousands of dollars.

Mortgage Loan Default

  1. Lenders often identify their borrowers' mortgage loans as being in default after two to three consecutive missed payments. The Federal Trade Commission notes that defaulting on mortgages can become very expensive for homeowners hoping to reinstate such loans. Lenders that are about to begin foreclosure proceedings will incur numerous costs, so they will add various fees to the loans as the foreclosure process moves forward. The credit rating agency Standard & Poor's states that typical lender foreclosure costs equal about 26 percent of mortgage loan amounts.

Fees and Costs

  1. Defaulting homeowners usually are charged late fees on every missed mortgage payment right up until their home's foreclosure sale. Depending on the size of the mortgage loan, accumulated late fees for missed payments can add hundreds of dollars to a borrower's mortgage bill. While properties in default move toward foreclosure, lenders may add charges for default-related services. During the foreclosure period, lenders' attorney fees, property title searches, and costs for serving homeowners with foreclosure notices also accumulate.

Property Related Costs

  1. During the foreclosure process, lenders incur certain costs related to the property's upkeep. When homeowners abandon their properties prior to foreclosure, lenders usually pay for property appraisals and maintenance services such as lawn care. Lenders also generally pay taxes and insurance on defaulting homeowners' properties because unpaid property taxes lead to foreclosure by local governments, with lenders losing the foreclosed homes entirely. Additionally, lenders' costs to auction foreclosed homes amount to thousands of dollars.

Average Total Cost

  1. As of 2008, it cost lenders an average of $50,000 to foreclose a defaulting homeowner's property. California allows homeowners to reinstate their defaulted mortgages by catching up on late payments and paying lenders' foreclosure-related costs. The state, for example, gives homeowners up to five days before their home's foreclosure sale to cure their defaults and stop the foreclosure. Mortgage reinstatement costs vary widely, though, California's mortgage reinstatement assistance program spends about $14,500 per each eligible homeowner.