Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the asset used as the collateral for the loan. The foreclosure process derives its legal basis from a mortgage or deed of trust contract, which gives the lender the right to use a property as collateral in case the buyer fails to uphold his or her repayment obligation.
As soon a borrower fails to make a loan or mortgage payment on time, the loan becomes delinquent. The foreclosure process begins when a borrower defaults or misses a loan or mortgage payment. At this point, a homeowner in default will be notified by the lender. Three to six months after the homeowner misses a mortgage payment, assuming the mortgage is still delinquent, and the homeowner has not made up the missed payments within a specified grace period, the lender will begin to foreclose. The further behind the borrower falls, the more difficult it becomes to catch up on payments because lenders add fees for payments that are late, often after 10 to 15 days.
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