What is a foreclosure?

In essence, foreclosure is the result of the owner of a property falling behind on payments. If the owner is behind on enough of their payments, the property will go into foreclosure. Foreclosure is a process, not a singular event or time in history. In this process, the lending institution—the bank or lender that gave the property owner their mortgage in the first place—will take steps to either gain payment from the owner or take back ownership of the property. This process is complicated and can vary in the amount of time needed to complete. Also, the foreclosure process is dependant greatly upon state and local laws. Some states will take shorter amounts of time and some will take longer.

There are plenty of reasons why a family would go into foreclosure, many of which you can probably imagine yourself. In a great many cases, medical debt is at fault. If a family has a catastrophic health crisis—a few examples would be cancer, heart attack, or traffic accident—and doesn’t have insurance or is underinsured, the family can quickly fall behind financially, leaving the mortgage payment unpaid. Other reasons include deaths in the family, layoffs, divorces, and an alternate property purchase, where an owner purchases another property and doesn’t or won’t continue paying on his or her first mortgage.

Foreclosure begins with a reason, perhaps one of the above, and the homeowner can no longer afford to make mortgage payments. Of course, the reason for missed payments doesn’t matter to the lender, only the fact that they aren’t receiving payment. Eventually the mortgage will go into default and the lender will, after a certain amount of time, begin foreclosure proceedings on the homeowner to reclaim and then auction off the property. Mortgages begin as legal agreements, entered into by both the lender and the borrower. The mortgager generally puts a lien on the title of the house so that, in the event that the borrower doesn’t pay or breaks the mortgage agreement, they can retake ownership of the property in order to recoup the balance on the mortgage.