When borrowing money to purchase a piece of land or a home, the property will usually stand good for the loan. Lenders most always require a certain amount to be paid down in cash on the property and will place a lien on the actual amount borrowed. The lien will be released once the loan is repaid in full.



In all reality, until you've paid the loan off in full, the bank literally owns the property. If for some reason you lose your job, become sick or are in an accident and unable to work and therefore, can't keep up with the monthly payments, the bank may foreclose.

When a loan enters default the lender has the right to take possession of the property which will then be sold to repay the balance that is owed on the loan. Many times talking with the lender can give you a little extra time to make good on the delinquent payments and avoid foreclosure.

The time required for a lending institution to reclaim the property varies depending upon which state you live in. In some states it could be as little as one missed payment, but normally you must be several payments behind before the foreclosure process is initiated.

Once you are behind the allowed number of payments, you will receive a letter telling you when the foreclosure will begin and you may be given 30 days or more to make the payments. Most lenders would prefer that you repay the loan. It's easier than them having to go through the process of selling the property.

After the property has gone through foreclosure, the lending institution will offer it for sale, either at auctions or for a private buyer. Very often in order to recover the remaining balance of the loan, these properties are sold below their actual value.

If you find yourself in this predicament the best way to try to keep ownership of your home or land is to keep communications open with your lender. In many cases they will try to work with you as long as they can and maybe it will be long enough for you to get back on track with your payments.