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What is Foreclosure? Mortgage foreclosure is the term used to describe the process by which a bank or mortgage company takes back ownership of real estate when the homeowner has not complied with the mortgage agreement. Simply stated this means that the homeowner was unable to keep up on the mortgage payment. 30-Days Past Due The foreclosure process may differ from state to state, however generally speaking the downward spiral in to foreclosure begins when a loan (mortgage) payment becomes 16 days past due. At that point, the mortgage lender may try to contact the homeowner to work out a repayment schedule to bring the loan current. If the mortgage payment becomes 30 days late and the following month looks suspect, then the collection calls will initiate and continue on a regular basis until the loan status is brought to current with no payments outstanding and overdue. 90-Days Past Due If payments fall 90 days behind, then Mortgage Company will likely refer the mortgage file to an attorney who will then begin formal foreclosure proceedings. Since the foreclosure process varies from state to state, the best source of information regarding how the foreclosure process might proceed is to speak with a local attorney. Generally, the lender must serve a notice of default on the homeowner after a certain time period from when the payment becomes past due. This time period varies by state. The notice will give the homeowner a specific time period and the amount necessary to be paid in order to “cure” the default and avoid foreclosure. If the homeowners cannot pay the delinquency and costs of the foreclosure within the allocated time period, the lender will then set a foreclosure sale date. A foreclosure sale date is a given time when the lender will sell the property at a public auction. If the sale price is not enough to cure the outstanding debt and costs associated with the sale, the mortgage lender can (and probably will pursue a deficiency judgment – a court order requiring the homeowner to pay the remaining balance to the lender. The property may be “redeemed” by the homeowner by paying all delinquencies and costs, up to the time of sale and, in some states, for a period after the sale. This redemption period varies by state, however the law in most states will give the homeowner every opportunity to stop the foreclosure process. As a matter of fact, the homeowners have options at their disposal right up to the minute that the auctioneer’s gavel comes down!