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Foreclosures is a situation in which a homeowner is unable to make full principal and interest obligations on his/her mortgage, which allows the lender to seize the property, evict the homeowner and sell the home, as agreed in the mortgage contract. One month after the homeowner misses a home loan payment, he/she is in default and will be notified by the lender. Three to six months after the homeowner does not show for a mortgage payment, presuming the mortgage is still delinquent, and the homeowner has not comprised the missed payments in just a specified grace period, the financial institution will start to foreclose. Typically the farther behind the customer falls, the more difficult it becomes to catch up since lenders add fees for payments that are 10-15 days overdue.

Each state has their own foreclosure laws covering the notices the lender must post publicly and/or with the homeowner, the homeowner's choices for bringing the loan current and avoiding property foreclosure, and the process for selling the property. In 22 states – including California, Illinois, and New York – judicial foreclosure is the norm, meaning the lender must go through the courts to get authorization to foreclose by demonstrating the borrower is overdue.

If the foreclosure qualifies, the local sheriff online auctions the home to the greatest bidder to attempt to recoup what the bank is due, or the bank becomes the owner and offers the house through the traditional route to recoup the loss. The entire contencioso foreclosure process, from the borrower's first, missed transaction through the lender's sale of the home, usually takes 480 to 700 times, in line with the Mortgage Bankers Organization of America.

The other 28 states – including Arizona, California, Georgia and Texas – mainly use non-judicial foreclosure, also known as the power of sale, which is often faster and will not go through the courts unless the home owner sues the lender.

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