What is a Foreclosure?

A home foreclosure is the legal process by which a home is taken back from the owner of a property by the lender when the mortgage loan terms and conditions set forth by the lender are not met and adhered to by the owner.

Typically, a house in foreclosure occurs when the homeowner has borrowed money, secured against their home by a mortgage lender, and can no longer keep up with their monthly mortgage payment.

If a homeowner is in default, there's a general process in which the foreclosure proceeding follows. However, many variables can impact the foreclosure process and each home in foreclosure can deviate from what's typically expected from a home foreclosure proceeding due to extenuating circumstances.

It's extremely important to remember that the home foreclosure process varies from state to state depending upon whether or not the state in which the home is in default is a judicial foreclosure state (home foreclosure is processed through the courts) or a non-judicial foreclosure state (home foreclosure is processed without going through the courts).

Within each state, there can be additional differences in the foreclosure process in which a home in foreclosure follows. However, to familiarize yourself with a basic overview of what happens when a home is in foreclosure, a broad guideline for judicial foreclosure state proceedings and non-judicial foreclosure state proceedings have been outlined below.

1. If the lender (typically a bank) has failed to get a homeowner to bring their loan payments current, the lender will have their lawyer file a Notice of Default or Lis Pendens in civil court. Once the court has processed the foreclosure paperwork, a notice will be sent to the homeowner informing them of the lawsuit and giving them an opportunity to file a response.
2. Once the court receives the homeowner's response, a foreclosure hearing is scheduled to address the matter in front of a judge. After examining the facts concerning the case, the judge can render a decision to proceed with foreclosing on the house in foreclosure or can schedule a follow-up foreclosure hearing in which this process will be repeated. If the owner fails to answer the court's summons or fails to file a response, the home foreclosure process will proceed as scheduled.
3. Either way, if a foreclosure judgement is rendered against the homeowner, the clerk of the court will inform the local sheriff and a date will be set to auction the home at the local public auction (typically at the local courthouse steps).

1. The lender notifies the trustee that the homeowner is in default of their mortgage loan commitment. The trustee, upon receiving notice from the lender, will issue a Notice of Default (NOD). The NOD is matter of public records and will be recorded at the local County Recorder's Office.
2. Upon receipt of the NOD (Notice of Default), the homeowner, within a window of time that can vary from state to state, has the ability to dispute the lender's claim or bring their delinquent loan payments current. If the homeowner doesn't bring their loan payments current, the trustee will push forward with scheduling a date in which the home in foreclosure will go to the public auction for sale. This notification is known as the Notice of Trustee Sale (NTS).

Regardless of whether or not the house in foreclosure is subject to a judicial foreclosure state procedure or non-judicial foreclosure state procedure, the foreclosed home can meet various fates once it goes to the public auction at the courthouse steps.

The house in foreclosure may sell to the highest bidder, it could be cancelled because a short sale or other negotiated sale occurred before the public auction date, the homeowner brought the delinquent loan payments current, or various other circumstances.

The home foreclosure process can be very complicated especially in today's current housing market crisis. Remember to keep a level head during the foreclosure process and seek professional advice concerning your personal circumstances.

Lastly, as serious and stressful as a home foreclosure can be, it's not the end of the world! Creating more stress will not improve your circumstances or resolve your foreclosure. Getting educated on how to proceed and hard work will pull you through!