Simply, foreclosure is the process by which a homeowners rights to a property are forfeited because of failure to pay the mortgage.

If the owner cannot pay off the outstanding debt or sell it via short sale, the property then goes to a foreclosure auction. If the property does not sell at auction, it becomes the property of the lending institution. It helps to remember that the word homeowner in this case is actually a misnomer they are actually borrowers. When someone buys a home, they sign a thick packet of papers one of which is the mortgage, or deed of trust. This document puts a lien on the purchased property, making the loan a secured loan. When a lender loans you money without any collateral (credit card debt, for instance), it can take you to court for failure to pay, but it can be very hard to collect money from you. Lenders often sell this sort of debt to outside collection agencies for pennies on the dollar and write off the loss. This is considered an unsecured loan. A secured loan is different because, although the lender may take a loss on the loan if you default, it will recover a larger portion of the debt by seizing and selling your property. Here are the five stages of foreclosure: Stage 1: Missed payments Foreclosure is a lengthy process, with specifics varying from state to state, but it all starts when a borrower fails to make timely mortgage payments. This is usually due to hardships such as unemployment, divorce, death or medical challenges. Other times, a borrower may decide to stop paying the mortgage intentionally because the property might be underwater (mortgage exceeds the value of the home) or because hes tired of managing the property. For whatever reason, he cant or wont meet the terms of his loan. Stage 2: Public notice After three to six months of missed payments, the lender records a public notice with the County Recorders Office, indicating the borrower has defaulted on his mortgage. In some states, this is called a Notice of Default (NOD); in others, its a lis pendens -- Latin for suit pending. Depending on state law, the lender might be required to post the notice on the front door of the property. This official notice is intended to make the borrower aware he is in danger of losing all rights to the property and may be evicted from the premises. Stage 3: Pre-foreclosure After receiving Notice of Default from the lender, the borrower enters a grace period known as pre-foreclosure. During this time anywhere from 30-120 days, depending on location the borrower can work out an arrangement with the lender via a short sale or pay the outstanding amount owed. If the borrower pays off the default during this phase, foreclosure ends and the borrower avoids home eviction and sale. If the default is not paid off, foreclosure continues. Stage 4: Auction If the default is not remedied by the prescribed deadline, the lender or its representative (referred to as thetrustee) sets a date for the home to be sold at a foreclosure auction (sometimes referred to as a Trustee Sale). The Notice of Trustee Sale (NTS) is recorded with the County Recorder's Office with notifications delivered to the borrower, posted on the property and printed in the newspaper. Auctions can be held on the steps of the county courthouse, in the trustees office, at a convention center across the country, and even at the property in foreclosure.

In many states, the borrower has the right of redemption (he can come up with the outstanding cash and stop the foreclosure process) up to the moment the home will be auctioned off. At the auction, the home is sold to the highest bidder for cash payment. Because the pool of buyers who can afford to pay cash on the spot for a house is limited, many lenders make an agreement with the borrower (called a deed in lieu of foreclosure) to take the property back. Or, the bank buys it back at the auction. Stage 5: Post-Foreclosure If a third party does not purchase the property at the foreclosure auction, the lender takes ownership of it and it becomes what is known as a bank-owned property or REO (real estate owned). Bank-owned properties are sold in one of two ways. Most often, they are listed with a agent for sale on the open market.

Foreclosure Law Practice Description Foreclosure law professionals assist lending institutions, bankers, and property owners in theforeclosure process. On the plaintiff side, foreclosure professionals represent lending institutions, mortgage bankers, and other grantors of credit in foreclosure, bankruptcy and related matters. On the defense side, foreclosure professionals help protect property owners from losing their property. Why Foreclosure Law Is Hot As the economy deteriorates, more homeowners are struggling to keep up with mortgage payments. Some experts estimate that as many as 10,000 foreclosures occur every day in the United States. Outdated state laws, such as fast-track foreclosures and excessive penalties, are exacerbating the national foreclosure epidemic. Consider the following statistics from the Mortgage Bankers Association: 1 out of every 200 homes will be foreclosed upon. Every three months, 250,000 new families enter into foreclosure. One child in every classroom in America is at risk of losing his/her home because their parents are unable to pay their mortgage. The national foreclosure crisis has created a growth in foreclosure law and a demand for legal professionals who can help protect the rights of lenders, investors, business owners and homeowners and guide them through the foreclosure process. Foreclosure Law - Job Duties Prosecution On the plaintiffs side, foreclosure law practitioners help lenders, creditors and loan servicers collect money owed to them. Foreclosure law practitioners:

Conduct judicial and non-judicial foreclosure sales; Collect on collateral and deficiency balances; Conduct forfeiture proceedings; Drat deeds in lieu of foreclosure, loan forbearance agreements, loan modification agreements, and loan sale agreements; Help lenders manage troubled assets in their loan portfolio; Assist lenders recoup their capital investment; Pursue repossessions; Litigate judicial foreclosures, quite title actions and post-foreclosure evictions; Represent clients in bankruptcy court.

Foreclosure law also involves commercial foreclosures a foreclosure against a business such as a restaurant, factory, retail establishment, or commercial office building. Commercial foreclosure is a complex process that may involve a number of issues such as tenant rights, assignments of rents, separate sales of pledged collateral, and UCC liens on equipment, furniture, goods and other items of personal property not connected to real estate. Defense Foreclosure law also involves protecting the rights of property owners and saving property from foreclosure. Foreclosure law practitioners:

Advise homeowners regarding available non-bankruptcy options; Negotiate forbearance agreements, short sales, refinancing agreements or mortgage modifications to create an alternative payment plan that avoids foreclosure; Pursue claims for predatory lending practices such as improper disclosure of loan terms; Mitigate fees and improper prepayment penalties; Advise clients regarding the debt relief available under the Bankruptcy Code; Advise clients of their rights under federal and state unfair debt collection practice laws; Help shape legislative reform in foreclosure laws.

Indian Laws : 1. Ins. by Act 20 of 1929, s. 30. Rights and Liabilities of Mortgagee 67. Right to foreclosure or sale.- In the absence of a contract to the contrary, the mortgagee has, at any time after the mortgage- money has become 1[ due] to him, and before a decree has been made for the redemption of the mortgaged property, or the mortgage- money has been paid or deposited as hereinafter provided, a right to obtain from the Court 2[ a decree] that the mortgagor shall be absolutely debarred of his right to redeem the property, or 2[ a decree] that the property be sold. A suit to obtain 2[ a decree] that a mortgagor shall be absolutely debarred of his right to redeem the mortgaged property is called a suit for foreclosure. Nothing in this section shall be deemed--

(a) 3[ to authorize any mortgagee other than a mortgagee by conditional sale or a mortgagee under an anomalous mortgage by the terms of which he is entitled to foreclose, to institute a suit for foreclosure, or an usufructuary mortgagee as such or a mortgagee by conditional sale as such to institute a suit for sale; or] (b) to authorize a mortgagor who holds the mortgagee' s rights as his trustee or legal representative, and who may sue for a sale of the property, to institute a suit for foreclosure; or (c) to authorize the mortgagee of a railway, canal or other work in the maintenance of which the public are interested, to institute a suit for foreclosure or sale; or (d) to authorize a person interested in part only of the mortgage- money to institute a suit relating only to a corresponding part of the mortgaged property, unless the mortgagees have, with the consent of the mortgagor, severed their interests under the mortgage. 67A. 4[ Mortgagee when bound to bring one suit on several mortgages.- A mortgagee who holds two or more mortgages executed by the same mortgagor in respect of each of which he has a right to obtain the same kind of decree under section 67, and who sues to obtain such decree on any one of the mortgages, shall, in the absence of a contract to the contrary, be bound to sue on all the mortgages in respect of which the mortgage- money has become due.] Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxx 85. [ Parties to suits for foreclosure, sale and redemption.] Rep. by the Code of Civil Procedure, 1908 (Act 5 of 1908 ), s. 156 and Sch. V. 2[ Foreclosure and Sale 86 to 90. [ Repealed.] [ 86 to 90.] Rep. by the Code of Civil Procedure, 1908 (Act 5 of 1908 ), s. 156 and Sch. V. Redemption 91. 3[ Persons who may sue for redemption.- Besides the mortgagor, any of the following persons may redeem, or institute a suit for redemption of, the mortgaged property, namely:-(a) any person (other than the mortgagee of the interest sought to be redeemed) who has any interest in, or charge upon, the property mortgaged or in or upon the right to redeem the same; (b) any surety for the payment of the mortgage- debt or any part thereof; or (c) any creditor of the mortgagor who has in a suit for the administration of his estate obtained a decree for sale of the mortgaged property.] 92. 4[ Subrogation.- Any of the persons referred to in section 91 (other than the mortgagor) and any co- mortgagor shall, on redeeming property subject to the mortgage, have, so far as regards redemption, foreclosure or sale of such property, the same rights as the mortgagee whose mortgage he redeems may have against the mortgagor or any other mortgagee. Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxxx

Effects of Foreclosure : 1. Finding a new home The immediate problem is obvious: where and how to find a new place to live.

Lack of cash for a rental deposit is probably the biggest barrier to foreclosed owners getting reestablished on their own. Landlords will sometimes accept tenants who have a credit score of just 580, says Maurice Ortiz, marketing director at The Apartment People in Chicago. But if landlords look beyond a numerical score to credit records, a foreclosure may spook them, since it indicates the potential tenant hasn't paid his housing bills, Ortiz adds. If the foreclosure can be explained, however, and if the rental candidate has a solid job history, he may be accepted. Moreover, "if you're on the edge, you may have to double your deposit," says Mark Fogelman, president of Memphis-based Fogelman Management Group. Scraping together a rental deposit isn't easy for cash-strapped foreclosed owners. "That's why I recommend that people try to make plans as soon as they think foreclosure (is inevitable)," says Patricia Lynch, a corporate trainer with ClearPoint Financial Solutions in Richmond, Va. Anyone who has an FHA-insured loan who's being foreclosed on should investigate the "cash for keys" program, whereby they get a check for up to $1,000 if they voluntarily vacate their home and leave it "broom clean," Lynch says. 2. Suffering through the credit fallout Once owners default on their mortgages, other creditors consider it much more likely they won't collect what they're owed either. "Credit cards have a 'default' rate, and (foreclosed owners) could see their interest rate jump to very high levels as much as 30 percent," says John Ulzheimer, president of consumer education for Credit.com. "You'll also have a hard time getting a decent car loan," he adds. If a foreclosure is an isolated event on an otherwise good credit record, consumers may be able to rehabilitate their records and garner better loans and card rates in 24 months, Ulzheimer says. But since a foreclosure is rarely the former owner's only credit slip-up and foreclosures are often combined with the fallout of punishing rates, some former homeowners will never climb back up to a good credit score, Ulzheimer says.

3. Buying another home of one's own Fannie Mae has just increased the length of time it takes from the completion of a foreclosure sale until the borrower can get a new mortgage from four years to five years. The extra year is designed to deter what Fannie Mae believes are borrowers who have made reckless debt decisions. But foreclosed owners who can explain that extenuating circumstances typically situations beyond someone's control, such as a job loss are the impetus for the foreclosure must wait only three years. Perhaps the best option for obtaining a mortgage after foreclosure is with a federally insured FHA loan, says Jerry DuPaw Jr., a mortgage loan officer in McHenry, Ill. The minimum time between the completion of foreclosure until when you can be approved for an FHA loan is three years whether or not there are extenuating circumstances. Still, FHA borrowers will have to show that they've been practicing good bill-paying habits since the foreclosure. 4. Owing a potential employer an explanation Should you lose your job as well as your home, your new job hunt shouldn't be hindered by the subject of your foreclosure coming up in job interviews unless you're applying for a job in which you handle money. "We recommend that employers do credit checks when they are concerned about how financially responsible someone is which may be for any money-related position from a cashier to an accountant," says Robin Throckmorton, a human-resources consultant in Loveland, Ohio. The federal Fair Credit Reporting Act has rules employers must follow, such as notifying the applicant of the credit check, and most companies limit checks so as not to run afoul of the law. If a foreclosed owner is applying for a financial job, he should have an explanation ready, perhaps describing how the foreclosure has changed some of his personal money-management skills today, Throckmorton says.

5. Getting hit with a tax bill It seems like the ultimate injustice: You lose your home and then weeks or months later you open the mail and find a bill for taxes on the amount of mortgage that the lender was never able to recover from the sale of the property. Any time debt is forgiven, it's a potentially taxable event. You are not paying back money that you borrowed, so that money is considered income by the IRS. However, there are some exceptions. Last year, Congress passed relief for foreclosed owners but only those who lost their principal residence and didn't have a mortgage that they had previously taken as a cash-out refinance to use the proceeds for expenses other than improving their home, says Julian Block, a tax attorney and syndicated tax columnist in New York City. But foreclosure victims may still not have to pay a tax tab, even if they had a cash-out refinance. That's because the IRS has long allowed taxpayers to escape a bill on forgiven debt if they are insolvent. If, for instance, you receive a Form 1099c from a lender saying it couldn't recover $5,000 of what it was owed, but your debts exceed your assets to the tune of $15,000, you must file Form 982 with your tax return to clear your tax obligation. 6. Living through loss The emotional toll of leaving a home and neighborhood are impossible to quantify. One recent report released by First Focus, a Washington, D.C., advocacy group, finds that about 2 million children are likely to be affected by foreclosure in some way, including the disruption of being placed in a new school after a move. One glimmer of hope is that the large numbers of foreclosures today may lessen the stigma of the event, Throckmorton says. She remembers when job applicants had to explain frequent changes in employment, because jumping from job to job was frowned upon. "Now that's considered normal. With foreclosures so much in the news, it may prompt people not to make judgments." Xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx xxxxxxxxxxx