Foreclosure is a process by which a lender takes title or forces the sale of a property as a result of the borrower’s failure to comply with the terms of the mortgage. The first missed payment begins the foreclosure process. Bringing the loan current (paying all the mortgage payment(s) and fee(s) due) or selling the property ends the process.

If after numerous attempts to collect payment from the homeowner fails, lenders will begin legal proceedings to foreclose on the property through a Notice of Intent to Foreclose posted in a local newspaper and at the county/city courthouse. The notice lists general information about the property and a date the property will be sold at auction.

Depending on the auction terms, the lender may set a reserve amount (a minimum amount they will sell the house). If that reserve amount is not met, the home becomes property of the lender, or Real Estate Owned (REO).

Depending on the state, a house sold at a foreclosure auction may go into a redemption period wherein the homeowner can buy back their home if they can pay for the entire loan, including any accumulated fees.