Property foreclosure is a situation in which a homeowner is unable to make full principal and interest repayments on his/her mortgage, which allows the lender to seize the property, evict the homeowner and sell the home, as stipulated in the mortgage agreement. One month after the homeowner misses a mortgage loan payment, he/she is in default and will be notified by the lender. Three to six a few months after the homeowner does not show for a mortgage payment, assuming the mortgage is still delinquent, and the home owner has not composed the missed payments in just a specific grace period, the lender will start to foreclose. The particular farther behind the debtor falls, the more difficult it becomes to catch up since lenders add fees for payments that are 10-15 days late.
Each state has their own foreclosure laws covering the notices the lender must post publicly and/or with the homeowner, the homeowner's selections for bringing the loan current and avoiding foreclosures, and the process for selling the property. In twenty two states – including Fl, Illinois, and New York – judicial foreclosure is the norm, meaning the lender must go through the courts to get agreement to foreclose by showing the borrower is delinquent.
If the foreclosure qualifies, the local sheriff auctions the property to the maximum bidder to try to recoup what the bank is owed, or the bank becomes the owner and markets the property through the traditional route to recoup their loss. The entire contencioso foreclosure process, from the borrower's first, missed transaction through the lender's sale for the home, usually will take 480 to 700 days, 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 called the power of sale, which is often faster and does not go through the courts unless the homeowner sues the lender.
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