A foreclosure is a process in which all of the rights of the homeowner that have been specified in a mortgage are terminated.  Therefore, this is a series of actions in which lending institution, such as a bank, will try to regain total control over the mortgaged 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 number of months that the borrower is delayed before the banks starts the foreclosure process may vary and may depend on the particular lender.

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.  The homeowner does not want to lose his precious home while the lender does not want to lose the steady flow of income provided by the mortgage payments.  The foreclosure process is also a time-consuming and expensive process for the lender.  The borrower and lender can often work together to find a solution to the problem that could be beneficial to both parties.  Therefore, it is important for the homeowner to contact the lending institution when he is starting to experience difficulties in coming up with the monthly installments.  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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