The former Citizens Bank building on West Grand Avenue in East Lansing

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 agreed 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 yearns for a mortgage payment, assuming the mortgage is still delinquent, and the home owner has not made up the missed payments in just a specified grace period, the financial institution will start to foreclose. The farther behind the customer 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 foreclosures, and the process for promoting 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 permission to foreclose by showing the borrower is overdue.

If the foreclosure is approved, the local sheriff online auctions the property to the highest bidder to try to recoup what the bank is payable, or the bank becomes the owner and markets the house through the traditional route to recoup the loss. The entire contencioso foreclosure process, from the borrower's first, missed repayment through the lender's sale of the home, usually takes 480 to 700 days, based on the Mortgage Bankers Association of America.

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

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