Foreclosure is the process that takes place when a homeowner fails to pay his or her mortgage for a period of time, usually exceeding 90 days. The foreclosure process may start as early on as 60 days from the date of the first missed payment, though it varies from lender to lender.
Banks are usually vilified as being too eager to go down the path of foreclosing homes but this is really not entirely true. In general, banks would prefer to come to an acceptable arrangement with the homeowners and would only use foreclosures as a last resort as this exercise would cost them time and money. Banks would rather spend their efforts looking for investment opportunities to grow their organization.
Homeowners are often given several chances to avoid the official foreclosure process by making payment arrangements. While it can be difficult to catch up on late payments, it is possible, and banks are usually quite patient with a homeowner that is fighting to keep his or her home.
If the bank sees a truly honest attempt to make up on the late payments and make good on the rest, they will delay the foreclosure process to give the homeowners a chance to save their properties.
If you end up being foreclose on even when you have done all you can to avoid it, know that it is not the end of the world, even though it can feel like it in the beginning. This foreclosure will definitely affect your credit scores but bear in mind that you can come back from it in the near future and become a homeowner again.
Bear in mind that you will usually be given up to 60 days to move out of your home when you are foreclosed on and will not be forced to move out immediately. There are even situations where you will not even have to move out until the bank finds a buyer for your home.
Every state in the US will usually have additions or amendments to the current federal foreclosure laws. You need to know about all these deviations in your respective states to know what your rights are. Like insolvency laws, it can be very complicated and if you do not know how to read between the lines, you might missed out on certain rights that you are entitled to. It would therefore be a wise move to consult a lawyer who can help give you peace of mind.