Foreclosure is a situation in which a homeowner is unable to make full principal and interest payments 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 payment, he/she is in default and will be notified by the lender. Three to six months after the homeowner yearns for a mortgage payment, supposing the mortgage is still delinquent, and the home owner has not made up the missed payments inside a specified grace period, the financial institution will start to foreclose. The particular farther behind the borrower falls, the more difficult it becomes to get up since lenders add fees for payments that are 10-15 days overdue.
Each state has their own foreclosure laws in the notices the lender must post publicly and/or with the homeowner, the homeowner's selections for bringing the loan current and avoiding foreclosure, and the procedure for selling the property. In twenty two states – including California, Illinois, and Ny ~ judicial foreclosure is the norm, meaning the lender must go through the courts to get permission to foreclose by proving the borrower is late.
If the foreclosure qualifies, the local sheriff auctions the home to the highest bidder to try to recoup what the bank is owed, or the bank becomes the owner and markets the home through the traditional route to recoup the loss. The entire judicial foreclosure process, from the borrower's first, missed payment through the lender's sale of the home, usually requires 480 to 700 times, in accordance with the Mortgage Bankers Relationship of America.
The other 28 states – including Arizona, California, Georgia and Texas – generally use non-judicial foreclosure, also called the power of sale, which tends to be faster and does not go through the courts unless the home owner sues the lender.
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