What Is Foreclosure?

It is a termination of all rights of the homeowner covered by a mortgage. Foreclosure is a process in which the estate becomes the property of the lending institution.

The Foreclosure process starts when the homeowner fails to make their mortgage payments on time. Homeowner’s tend to miss their payments for several different reasons… unemployment, medical challenges, divorce, etc.

Foreclosure is applied to any method of enforcing payment of the debt secured by a mortgage, by taking back the property and selling it. Borrowers and lenders now face a challenging situation. Both seek a compromise that permits a win-win outcome. The borrower to keep his home or business, the lender to keep receiving mortgage payments.

Foreclosure proceedings usually start with a letter from the lender demanding payment. This letter of notice is referred to as a Notice of Default (NOD). Depending on the state, this letter goes out when the homeowner is about 3 months late on their mortgage payment. Keep in mind that the notice is a threat to sell your property, terminate all your rights in that property and evict you from the premises.