What Exactly is Foreclosure?

Foreclosure is to shut out, to bar, to extinguish a mortgagor’s right of redeeming a mortgaged estate. It is a termination of all rights of the homeowner covered by a mortgage. Foreclosure is a process in which the estate becomes the absolute property of the lending institution.
Foreclosure numbers are growing daily. Of the one hundred twenty or so million homes in America, more than 4% or roughly 4.8 million of them are facing foreclosure. Some of these homeowners are able to work their way out of foreclosure, however, according to MBA there were about 500,000 homes that went through foreclosure last year. Foreclosure threatens these homeowners because they are late or seriously behind on their mortgage payments.
The Foreclosure process begins when the homeowner fails to make payments of the money due on the mortgage at the appointed time. This may be due to several reasons. Unemployment, divorce, medical challenges, terms of the loan, sick of property management, and even death.
Foreclosure proceedings typically start with a formal demand for payment which is usually a letter issued from the lender. This letter of notice is referred to as a Notice of Default (NOD). The lender will issue this notice when the homeowner has been 3-4 months delinquent on the mortgage payments.

At this time, the lender will also file a lis pendens or “suit pending” in the county land records office. Lis pendens is taken as constructive notice of the pending lawsuit, and it serves to place a cloud on the title of the property in question until the suit is resolved and the notice released or the lis pendens is expunged. 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.