Tanay Rural Bank foreclosed properties as of September 2011

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 specified 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 a few months after the homeowner misses a mortgage payment, assuming the mortgage is still delinquent, and the home owner has not composed the missed payments inside a specified grace period, the financial institution will commence to foreclose. The farther behind the debtor falls, the more difficult it becomes to get up since lenders add fees for payments that are 10-15 days overdue.

Each state has the 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 foreclosures, and the method for promoting the property. In twenty two states – including Florida, Illinois, and New York : judicial foreclosure is the norm, meaning the lender must go through the courts to get permission to foreclose by showing the borrower is delinquent.

If the foreclosure is approved, the local sheriff sales the home to the greatest bidder to try to recoup what the bank is payable, or the bank becomes the owner and sells the property 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 for the home, usually requires 480 to 700 times, based on 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 is often faster and does not go through the courts unless the home owner sues the lender.

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