What is foreclosure? When you take out a mortgage loan to purchase a home, you are actually borrowing money from a financial institution, and then allowing that institution to hold on to your home’s title for collateral, just in case. The “just in case” part is where people get snagged. In the case that you default (or fall considerably behind on payments), your lender has the right to claim that title and you are forced to forfeit ownership of the property, regardless of any money you may have already paid for it. This process is called foreclosure.
Can foreclosure be prevented? The foreclosure process happens in stages, and there are some stages in which you can reverse the process (given you are able to meet certain requirements), and some stages in which there is no turning back. Specifically, the sooner you can act in a foreclosure proceeding, the more likely it is that you can prevent it from finalizing. If you are at all in doubt of your rights and/or responsibilities, then you should consult with a real estate attorney immediately.
The foreclosure process. The first stage of foreclosure is referred to as default. A home-owner enters default after an amount of time of mortgage non-payment (as specified by the state, but usually 90 days). Once in default, a notice of default is filed with the county courthouse and the home-owner is given a number of days in which to bring the mortgage current (thereby preventing the foreclosure); this time frame is usually 90 days, or a total of three calendar months. If the home-owner fails to bring the mortgage current within that period of time, an auction is scheduled for the property. This auction is called a trustee sale, and notice of a trustee sale is filed at the county courthouse, posted on the property’s front door, and published in the local newspaper. In most states, the home-owner retains the right to bring the mortgage current up to the point of the home being sold on auction day. This is called the “right to redemption.”