what is foreclosure 
foreclosure is the legal process by which a lender attempts to recover the amount owed on a defaulted loan by taking ownership of the mortgaged property and selling it typically default is triggered when a borrower misses a specific number of monthly payments but it can also happen when the borrower fails to meet other terms in the mortgage document understanding foreclosurethe foreclosure process derives its legal basis from a mortgage or deed of trust contract which gives the lender the right to use a property as collateral in case the borrower fails to uphold the terms of the mortgage document although the process varies by state the foreclosure process generally begins when a borrower defaults or misses at least one mortgage payment the lender then sends a missed payment notice that indicates that month s payment hasn t been received if the borrower misses two payments the lender sends a demand letter this is more serious than a missed payment notice but the lender still may be willing to make arrangements for the borrower to catch up on the missed payments the lender sends a notice of default after 90 days of missed payments the loan is handed over to the lender s foreclosure department and the borrower typically has another 30 days to settle the payments and reinstate the loan this is called the reinstatement period at the end of the reinstatement period the lender will begin to foreclose if the homeowner has not made up the missed payments 2a foreclosure appears on the borrower s credit report within a month or two and stays there for seven years from the date of the first missed payment after that the foreclosure is deleted from the borrower s credit report 3the foreclosure process varies by stateeach state has laws that govern foreclosures including the notices that a lender must post publicly the homeowner s options for bringing the loan current and avoiding foreclosure and the timeline and process for selling the property a foreclosure the actual act of a lender seizing a property is typically the final step after a lengthy pre foreclosure process before foreclosure the lender may offer several alternatives to avoid foreclosure many of which can mediate a foreclosure s negative consequences for both the buyer and the seller in 22 states including florida illinois and new york judicial foreclosure is the norm 4 this is where the lender must go through the courts to get permission to foreclose by proving the borrower is delinquent if the foreclosure is approved the local sheriff auctions the property to the highest bidder to try to recoup what the bank is owed or the bank becomes the owner and sells the property through the traditional route to recoup its losses the other 28 states including arizona california georgia and texas primarily use nonjudicial foreclosure also called power of sale 4 this type of foreclosure tends to be faster than a judicial foreclosure and it does not go through the courts unless the homeowner sues the lender 