What is a Foreclosure and What Does it Mean for You?

Foreclosure is the process of the lending taking possession of a property when the homeowner is in default. Many people get into trouble by not making their monthly mortgage payments on time every month, and interest rates are likely one of the reasons that these people can’t afford their monthly payment. If someone has missed several payments, they are likely at risk of losing their home in foreclosure. When people have stopped making their mortgage payments, the bank that holds the loan on the property will file a notice of default to let everyone know that they are in danger of losing their house if the money owed is not paid before an established deadline.

In the following sections, you’ll be reading about the difference between foreclosure and eviction, the process of foreclosure, and the legal rights that homeowners have during foreclosure.

Foreclosure vs Eviction

The difference between foreclosure and eviction is that foreclosure is the legal process by which a mortgaged property or other asset is sold to pay off the balance of a loan. 

Eviction, on the other hand, is an action taken by landlords to force someone out of their rental home so they can retake possession of it themselves.

Eviction proceedings, are often initiated by the Landlord filing an “Ejectment proceeding”.  Ejectment proceedings are a type of lawsuit that asks a judge to decide whether an individual has the right to remain in their living space after failing to pay rent. For example, if a tenant lives on a month-to-month lease agreement and they miss consecutive months of rent, they are likely subject to an ejectment lawsuit.

The Process of Foreclosure

The actual process by which a mortgaged property is foreclosed upon can vary depending on how soon the payment has stopped being made on the mortgage loan. Some lenders might skip over this step and proceed directly to foreclosure proceedings. Both of these processes are complicated, but the one with more immediacy is foreclosure.

It starts when an owner fails to make their monthly mortgage payment for a predetermined amount of months consecutively.  Most lenders will initiate these proceedings once a lender has missed 3-4 months of mortgage payments, or been routinely late over a period of 6-9 months.

The next step is to notify the owner that they have defaulted on their loan and that the lender has filed a notice of default as a result. In most cases, this notification will come as a letter from the bank or institution that holds the mortgage loan on their property. This notice gives them the steps required to make the necessary corrections to avoid foreclosure proceedings.

If they fail to make their monthly payments, or is a borrower is unable or unwilling to meet the terms as outlined by the lender, they will proceed with filing a notice of trustee’s sale. Once this paperwork has been filed and processed by the court system, it means that the home will soon go up for foreclosure auction.

Legal Rights do Homeowners Have During Foreclosure?

People who are facing foreclosure proceedings can make several decisions that could help them save their homes from being sold at auction. For example, they can try and refinance their mortgage loan to better suit their current financial needs and income level. They also have the option to work with a lender to get a loan modification.  The Seller also has the right to sell the property in the open market.

Some advice might suggest that Homeowners elect to file for bankruptcy, to prevent the foreclosure file moving forward.  In most cases, filing for bankruptcy will only stall the process of foreclosure and not stop it from taking place entirely. In some instances, a homeowner’s lender might not agree to terms that are proposed as part of a bankruptcy filing and could continue with their own workout or repayment plan.  In many cases filing for bankruptcy just to avoid a foreclosure simply does more harm (credit worthiness in the future, time, expenses) than good.

In most states, Homeowners do have the right to reinstate their mortgage while it is going through the foreclosure process.  This process allows a Homeowner to pay all amounts that are in arrears, and then continue on with making the mortgage payments that were previously in place.


The process of home foreclosure can be complicated and expose homeowners to a lot of stress and uncertainty. Understanding each step in the process could help them make better decisions that could put them in a stronger fiscal position and help with avoiding foreclosure. It also means they should look into their legal rights and options before signing over their home so they don’t lose it without at least exploring all of their options.

If you need further information, make sure to sign up for our newsletter or join our Thursday Office Hours Group to make connections and get free tips!

Get More Info On Options To Sell Your Home...

Selling a property in today's market can be confusing. Connect with us or submit your info below and we'll help guide you through your options.

What Do You Have To Lose? Get Started Now...

We buy houses in ANY CONDITION in North Carolina. There are no commissions or fees and no obligation whatsoever. Start below by giving us a bit of information about your property or call (704) 741-3399...
  • This field is for validation purposes and should be left unchanged.