Foreclosure is the process by which a lender reclaims property when a borrower defaults on a loan.

The foreclosure laws change from state to state and this is the basic process:

  • The borrower defaults on mortgage payments.
  • The borrower gets phone calls and letters from the lender demanding payment.
  • If the payments are not made, a notice of default is filed with the county which usually allows for a specified period of time for the borrower to make the payments current.
  • If the borrower fails to make the payments current during the redemption period, a notice of sale is posted on the physical property and filed with the county.
  • A sale is held where the property is auctioned to the highest bidder at the time and place designated in the notice of sale.
  • At the auction, one of two things happens.  The property is either sold to the highest bidder, or nobody bids on it and the property goes back to the lender.
  • When the property belongs to the lender, it is called real estate owned or REO.

*It is usually possible to stop the foreclosure process at any time by becoming current with all past due mortgage payments.

Some consumers are headed for foreclosure, regardless of efforts to avoid it.  In most cases, industry professionals do not even know a homeowner is headed for trouble until it is too late.  Foreclosure is considered a last resort by lenders.

For more information on the forclosure process or to purchase a copy of Mangled Mortgage, email