When a homeowner-borrower does not keep up with his/her payments the common actions follow…

1. A Lawsuit. The lender foreclose the property through a lawsuit. The lender must have a copy of a summon and complaint filed against the borrower. The borrower is given 20 days to file an answer with the court if he/she wants to contest the foreclosure.

If no answer was given, the clerk of court will enter a default against the borrower and this would mean that the borrower has given up the chance to counter the foreclosure. The property will be open for sale and a schedule will then be set.

2. An Answer. If the borrower wants to contest the foreclosure, he/she will file an answer to show the court that the foreclosure is questionable. A court will then decide whether the loan is in default and how much is due to the lender.

The lawsuit will be dismissed if the borrower pays the lender the entire balance with interest plus reasonable legal fees and costs.

3. A Judgment. The court will enter a judgment of foreclosure if the borrower fails to answer the complaint, or fails to show that there is any question about the possible loan default. The judgment will state how much is owed to the lender.

4. A Redemption Period. Once the judgment is entered, the borrower will still have a right to the property. This is called the "right of redemption". This means that he/she can keep his home by paying back the full amount of the mortgage loan, plus legal costs and fees (not just the payment arrears). The right of redemption exists for 90 days immediately following the court's judgment.

5. Public Sale/Eviction. If the borrower does not "redeem" the property within the 90-day redemption period, he/she will not own the property any more. The borrower is then subject to eviction by the lender. This can be in a very short time frame. There will likely be no further court hearings before this happens. The lender is now entitled to possession of the property regardless of how much, or how little, you still owe; the time of the year; or for any other reason.

The lender will open the sale of the property. After the lender receives the proceeds from the sale, the lender will pay the balance on the loan mortgage. Remaining sales proceeds will be paid to any other lienholders or to the borrower, as the court will instruct the lender. If, however, the sale price is less than the amount owed to the lender, the lender may be able to hold the borrower responsible for the difference.

6. Report Of Sale. After the sale, the lender must file with the court a "Report of Sale," explaining how the money from the sale of the property was received and how the lender proposes to spend it. The lender must send a copy of the "Report of Sale" to the borrower at his/her last known address. To be sure the borrower get this report, he/she must leave an updated forwarding address with the post office, the clerk of courts, the lender's lawyer, or all three. When the borrower receives the notice, he/she can object to how the money from the sale is to be distributed.