These days we’re seeing more and more homes going into foreclosure. This is due in part to the economy, and in part to the sub-prime lending fiasco of the past few years. Sometimes it’s simply due to borrowing beyond one’s means, or unexpected financial setback such as losing a job.

When a home goes into foreclosure, the lender obtains a court order to terminate the agreement and take possession of the property back from the signer. This is usually the bank that underwrote the mortgage agreement or loan.

When someone takes out a home loan or mortgage, the bank or lender gets a security interest from the borrower, in essence pledging the house or property as security for the loan. If they default on the payment terms, the bank or lender can try to repossess, or foreclose on the property.

While the main reason for foreclosure is failure to pay the mortgage note or loan, it isn’t the only reason. Property tax that hasn’t been paid, overdue HOA dues or assessments, even unpaid contractor bills are all problems than can lead to a foreclosure action.

The foreclosure process as it relates to a residential mortgage loan happens when the bank or other secured creditor takes possession of the property after the owner has failed to comply with the mortgage agreement. Most commonly, this is happens as a failure to meet payment of the home loan.

After foreclosure, the creditor will likely try to sell the property and keep the proceeds in order to pay off its mortgage plus legal costs. This is what foreclosing on the mortgage or loan actually is. Though there are some possibilities for the homeowner to reclaim their property at that point, it’s clearly much more desirable to avoid going into foreclosure to begin with.

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