12/28/2010 2010 worst year for bank failures since 1992

Property foreclosure 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 stipulated 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, supposing the mortgage is still delinquent, and the homeowner has not comprised the missed payments inside a particular grace period, the financial institution will start to foreclose. Typically the farther behind the borrower falls, the more difficult it becomes to get up since lenders add fees for payments that are 10-15 days past due.

Each state has the own foreclosure laws in 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 method for selling the property. In twenty two states – including California, Illinois, and Nyc : judicial foreclosure is the norm, meaning the lender must go through the courts to get agreement to foreclose by proving the borrower is late.

If the foreclosure is approved, the local sheriff auctions the property to the maximum bidder to attempt to recoup what the bank is owed, or the bank becomes the owner and offers the home through the traditional route to recoup their loss. The entire judicial foreclosure process, from the borrower's first, missed repayment through the lender's sale of the home, usually takes 480 to 700 days, in accordance with the Mortgage Bankers Association of America.

The other 28 states – including Arizona, California, Georgia and Texas – generally use non-judicial foreclosure, also called the power of sale, which is commonly faster and really does not go through the courts unless the homeowner sues the lender.

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