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Some people get the mortgage foreclosure process and the tax foreclosure process mixed up. The mortgage foreclosure process is more common and it happens all year round whereas the tax foreclosure process is usually once a year. When people fail to pay their mortgage payments, the lender will initiate the mortgage foreclosure process to take their homes away.

The mortgage foreclosure process is long and involved. Different states have different foreclosure rules and slightly different mortgage foreclosure process. Lenders seeking to foreclose have to comply with state's mortgage foreclosure process which can be costly and time consuming.

The first step of the mortgage foreclosure process is when a homeowner cannot pay his or her mortgage payments. Banks often wait a few months before they take any actions. Banks will send letters asking the homeowner to pay or even negotiate a payment plan. If the homeowner cannot pay for three consecutive months, then the mortgage account would be in default.

When the account is in default, the next step of the mortgage foreclosure process is the notice of default. The homeowner is not in foreclosure yet but the notice of default is the first real evidence of the mortgage foreclosure process.

About three months into the mortgage foreclosure process, if a payment plan cannot be reached between the lender and the homeowner, then the lender will send a notice of foreclosure and perhaps also the notice of trustee's sale depending on state law. These notices are often served to the homeowner by certified mail or in person by the Sheriff. Public notices are also posted and you will get calls and people coming by trying to see if your home would be a good investment.

Sometimes the lender will also put the foreclosure sign up infront of the home that is being foreclosed on. This part of the mortgage foreclosure process is the worst for homeowners because friends and neightbors can see that they are in foreclosure and it is embarrassing.

The homeowner usually has few chances to pay off the mortgage balance and get the home back in his or her name. However, most people in foreclosure cannot find money to pay off the bank and getting a new loan can only lead to more problems. The last day a homeowner can reclaim the home is about six days before the foreclosure auction.

When the day of the trustee's foreclosure sale arrives, the lender will auction off the foreclosed home to the highest bidder. This is the final stage of the mortgage foreclosure process when the lender can finally get rid of the property and get some of the money back. Highest bidders are often people looking for cheap homes to fix or move into. Many of them are real estate investors.

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