Real Estate Community Forum

I was wondering how does a house end up in foreclosure? I know if you don't pay your monthly mortgage the bank has the right to take the house aways from you and put it up for sale, but are there any other factors that give them this right? Also how delinquent must you be in order for them to step in?

I assume banks really don't want you to lose your house. There must be a way to negotiate with the bank to work out a new payment plan. Right? Does anyone know what options are available for people who might lose their house?

A foreclosure occurs when a property owner cannot make principal and/or interest payments on his/her loan, typically leading to the property being seized and sold.


The foreclosure process is not very difficult to understand. There are several stages during which the homeowner has an opportunity to bring the loan current and avoid foreclosure.

After about three to six months of missed payments, the lender orders a trustee to record a Notice of Default (NOD). At the County Recorder's Office. This puts the borrower on notice that he or she is facing foreclosure and starts a reinstatement period that typically runs until five days before the home is auctioned off.

If the default isn't corrected (the loan must be brought current) within three months, a foreclosure sale date is established. The homeowner will receive a Notice of Sale, and this notice will also be posted on the property. In addition, the Notice of Sale is recorded at the County Recorder's Office in the county where the property is located. Finally, this Notice of Sale is also published in newspapers local to the county in question over a three-week period.

The foreclosure Trustee Sale typically occurs on the steps of the county courthouse in which the property is located. The time and location of this sale are designated in the Notice of Sale. At the Trustee Sale, the property is auctioned in public to the highest bidder, who must pay the high bid price in cash, typically with a deposit up front and the remainder within 24 hours. The winner of the auction will then receive the trustee's deed to the property.
Foreclosure Auction

At auction, an opening bid on the property is set by the foreclosing lender. This opening bid is usually equal to the outstanding loan balance, interest accrued, and any additional fees and attorney fees associated with the Trustee Sale. If there are no bids higher than the opening bid, the property will be purchased by the attorney conducting the sale, for the lender.

If this occurs, and the opening bid is not met, the property is deemed a REO or Real Estate Owned. This typically occurs because many of the properties up for sale at foreclosure auctions are worth less than the total amount owed to the bank or lender.

When you purchase property at a foreclosure sale, all junior liens other than property taxes are wiped out. Priority of liens is determined by the date of recording. When you purchase a REO aka. Bank REO, you will typically receive the property with a clean title.

Very interesting information Relaw. You talked about houses that go into foreclosure if the owner falls behind on his mortgage payments, which is usually 3-6 months. How does it work if your behind on taxes? What is the time frame on that?

Also if the homeowner can not pay their tax or mortgage payments, is there any help for them? I would think the bank really doesn't want to take the property away from the owners because of the potential lose in revenue. Am I right in assuming this?

Possible Foreclosure Procedures re: Property Taxes

The following is a brief description of the steps involved in the foreclosure process when you fall behind on payment of property taxes.

I highly recommend that you check with your specific county as the below is an outline of how it may work. It is generally a three year process on property taxes.

Action taken by a county

A list of all properties subject to foreclosure may be prepared mid year of each year for accounts with property taxes three years delinquent. Lienholders may ask to be notified if a certain property is subject to foreclosure.


Approximately one month after the foreclosure list is prepared, the district attorney applies for a judgment and decree through the circuit court.

The foreclosure list is published generally the same day. Notice of the foreclosure is run in a newspaper of general circulation in the county. Notice of foreclosure may be made by personal service.


A judgment and decree is secured from the circuit court not less than 30 days after the application for judgment and decree. After that, you have two years to redeem property. Only the following can redeem property: (l) a person with an interest in the property at the date of judgment and decree, (2) an heir or devisee of a person with an interest in the property, (3) a holder of a lien of record on the property, such as a mortgage company, and (4) a municipal corporation with a lien on the property, such as a city or sewer district. (time period may vary)


All persons with a legally recorded interest in the property are generally notified by both regular and certified mail that the period of redemption will end. The tax collector is responsible for providing this notice. The notification is to be made not less than one year before the expiration of the redemption period. (again check with your county as the time period may vary)


A “Notice of Expiration of Redemption Periodâ€