A foreclosure is a process in which all of the rights of the homeowner that have been specified in a mortgage are terminated.  Thus, a foreclosure is a procedure in which the bank or lender gains absolute control of the mortgaged property, which is usually a home.  The foreclosure process is often started by the lender after the borrower had been delayed for a number of months in coming up with the monthly payments.  The actual length of time that the lender allows the homeowner to be delayed in the payments before initiating the foreclosure proceedings may not be the same for the various lenders.

There are various possible reasons why the borrower was incapable of paying what was due at the proper time.  These include the loss of a job, a serious illness in the family, a divorce, death in the family, and the terms of the loan agreement.  It is possible that the terms of the loan could be the cause because some are adjustable-rate mortgages and the interest rate could have reached a level that has made the monthly payments too expensive for the borrower.  However, with the recession, the primary cause of default is the loss of a job as the unemployment rate climbs to levels that have not been reached in a long time.  

Both lender and borrower are not in favor of a foreclosure.  It is obvious that the homeowner would not want to leave his home while the lender prefers to have the steady stream of monthly mortgage payments instead of selling the property.  The foreclosure process is also expensive and requires a lot of time for the lender.  It is possible for the lender and borrower to cooperate with each other in looking for a solution to the problem that would be acceptable to both parties.  Thus, it is advisable for the borrower to contact the lender if he has begun to experience problems in making the monthly payments.  There is still a possibility that a solution could be worked out that would be satisfactory to both parties.

The foreclosure process normally begins with a the lender issuing a Notice of Default (NOD), which is a letter formally asking the borrower to pay what is due.  The NOD is normally issued after the homeowner has failed to make the mortgage payments for three months.  It should be noted that this letter is actually a threat to terminate the rights of the homeowner in that property, sell it and force him to leave the premises.


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