Foreclosure ProcessStep 1. Pre-Notice of Default
At this point, the loan borrower is behind 2 or 3 monthly mortgage payments. The loan servicer sends the Notice of Default to legally start the foreclosure process. In most cases though, banks and lenders don't send this till the fourth payment is missed. They do have the right to send it after the first missed mortgage payment.
Step 2. Pre-Foreclosure
This stage is from the time the Notice of Default is sent and the actual attempted sale of the property.
Step 3. Foreclosure Auction Sale
This step is when the property is put up on auction at your city's court house. The proceeds goes to the bank or lender to cover the mortgage and other fees occured in the foreclosure process.
Step 4. REO / Real Estate Owned Properties
In some cases, the property does not sell, then the property becomes the property of the bank. They usually try to get an agent to help sell the property.