A foreclosure generally starts when a homeowner can no longer make payments on their mortgage loan. As a result, the bank or government lender in charge of the loan will seek to collect the remaining unpaid debt by repossessing the property under mortgage and selling it off to the public.
During a foreclosure, the homeowner will have the chance to pay off their default debt and stop the foreclosure process before their home is sold. However, there is usually only a small window of time during which this is an option. Depending on the local state customs, this period can range from 30 days up to a year. This is usually the best chance a homeowner has for retaining control of their property.
Once this period expires, the lender will go ahead with scheduling a date for the foreclosure sale of the property. Again depending on the local law as well as the terms of a mortgage, they may be required to obtain the consent of a court before scheduling and pursuing a sale. This process is known as judicial foreclosure. If the lender doesn't go through the proper court channels to obtain permission to sell the home, the foreclosure sale could be put on hold indefinitely. Many states, however, allow the the lender to schedule and pursue a foreclosure sale on their own. Be sure to check the local foreclosure laws in your area, as they can have a huge bearing on how to proceed with either protecting your home from foreclosure or buying foreclosure real estate.
On the day of the foreclosure sale, a trustee or court official will auction off the foreclosed property to the highest bidder. After the sale, this person will retain all rights to ownership of the property, unless there is a period of redemption provided by law. A period of redemption allows the original homeowner one last chance to pay off the full amount of their mortgage loan and retain control of their property. If this period expires, then the property is officially the possession of the winning bidder.
This is the general scope of a foreclosure, but be sure to remember that the foreclosure process differs from state to state. Get a clear idea of the procedures used in your area and you'll be more prepared to deal with a foreclosure.
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