Written By: M. Shayne Arcilla; Updated December 10, 2018
A foreclosure occurs when a homeowner defaults on her mortgage payments. The process typically begins after the fourth missed payment with the issuance of a Notice of Default. The length of the entire foreclosure process depends on state law and other factors, including whether negotiations are taking place between the lender and the borrower in an effort to stop the foreclosure. Overall, completing the foreclosure process can take from 6 months to more than a year.
Mortgage vs. Deed-of-Trust
State law determines the method through which homes are purchased. As a result, homes can either be purchased with a mortgage or a deed-of-trust. The lender would benefit from a deed of trust because it allows them to pursue a nonjudicial power of sale, thereby circumventing court procedures. On the other hand, having a mortgage would require that the lender obtain court permission in order to foreclose on the borrower.
Notice of Default
The Notice of Default starts the official foreclosure process. This notice is issued 30 days after the fourth missed monthly payment. From this point onwards, the borrower will have 2 to 3 months, depending on state law, to reinstate the loan and stop the foreclosure process.