For many homeowners who retreat into fear and anxiety once they begin missing mortgage payments, the process the bank follows to foreclose on the home can be surprisingly short. In fact, in just a few short months, borrowers can go from being delinquent on the mortgage to being sued to having their home auctioned off to being evicted by the bank or new owner afterward.



The following story is how a typical foreclosure in a judicial state (requiring a judgment for foreclosure) may proceed. It assumes that the family in the fictional story do nothing to save their home or defend against the foreclosure in court to try and buy more time.

John and Mary bought their home in 2006 for $250,000, at the top of the real estate market in their neighborhood. They put no money down because they had good enough credit to qualify for a 100% LTV subprime mortgage. Since then, the house has declined in value, like all of the homes in their neighborhood, and was recently appraised at $175,000.

They have paid off essentially none of the balance owed on the mortgage, and just recently John lost his job in a plastics mold manufacturing plant. He has found a temporary position, but instead of making $60,000 a year, now he is lucky to make $300 a week. Mary has taken up a part time job, as well, but her income is even less than John's, and they will be unable to afford their mortgage payment any longer.

Inevitably, John and Mary begin missing payments on the mortgage and their other bills, although they do not hear from the bank until three months have passed. Because they live in a judicial foreclosure state, their lender sends them a notice stating that, if they do not pay back the arrears within 30 days or make other arrangements, legal foreclosure proceedings will be initiated.

John and Mary do not respond to this letter, nor to any of the daily calls from the collections department of the bank. They assume that they will be humiliated and pressured into making a payment they can not afford, and they need every penny they are currently making to pay for food and utilities. So they do not contact the bank for workout solutions, and the bank takes the next step.

After the thirty days have gone by, the lender sends out a 10 day notice to foreclose on the home, and refers the loan to its local attorneys in that state. A few weeks later, the lawsuit is filed in the county court, and John and Mary receive a copy of a summons and complaint, giving them 30 days to file their answer.

Although the family consults an attorney about defending the foreclosure in court, they decide not to pursue this option due to the high cost and unlikely outcome of winning the lawsuit. Rather than hire an attorney or defend the foreclosure on their own, John and Mary decide that they will not answer the complaint and hope that something better comes their way.

But nothing better comes, and the bank requests the court to grant it a default judgment and order that the home be auctioned off at the next county sheriff sale. Since John and Mary did not file an answer, the judge grants the bank's motion for default judgment and the house is listed for sale. The lender sends the family a copy of the judgment and notice of sale, giving them until the date of the auction to pay off the total amount due.

The next month, the house is auctioned on the county courthouse by the sheriff's department, although no one purchases the home. Ownership reverts back to the foreclosing lender, which is the only party to bid on the property. The entire foreclosure process takes about 100 days from the time of the first notice until the bank takes back ownership.

Within days after the home is auctioned, the sale is confirmed by the court and the bank's attorneys request that the homeowners and any remaining personal items in the house be removed. The judge grants this order, and a 3 day eviction notice is posted on the property by a sheriff's deputy within a few days, to the shock, horror, and surprise of John and Mary, who thought they would be given more notice if they were to be forced out.

At this point, John and Mary have taken no specific action to save their home and are now in danger of being forcefully evicted from the property within 72 hours of receiving notice. Because they did nothing to stop foreclosure or delay the lawsuit from progressing, they have only had a little over three months to save up money to move. This is not enough to find an apartment, and the family must move in with relatives until they can afford a new place.