Filing With the Courts

• After 90 days of late payments and failed negotiations with the homeowner to get his accounts up to date, the bank will contact its foreclosure attorney. The attorney files the foreclosure papers, called "lis pendens," with the county courthouse. In the book "National Foreclosure Awareness," Tia M. Selner-Monday says, "Once you are served with the letter [foreclosure papers] you have 20 days to respond." The bank must announce the foreclosure in the legal sections of the local newspaper. All states don't require court filings but do require public announcements and ample response time for the homeowner.
  
  

Legal Proceedings

• A summary judgment hearing is scheduled, where the court will set an auction date for sale of the home. During the foreclosure process, you can reinstate the loan by meeting the terms of the bank before the foreclosure judgment has been issued. In the book "How to Sell a House When It's Worth Less Than the Mortgage," Dwan Bent-Twyford says many homeowners give up and abandon their homes at this point. Those who do so lose all leverage in negotiating better loan terms. The bank has the right to change the locks, secure the property and post a "no trespassing" sign.
  
  

Before and After the Sale

• Homeowners can ask for a delay to hold the bank off if they are expecting large sums of money. Repayment options can be negotiated if the bank approves. Depending on how much the banks can get from an auction or a sale, you may still be responsible for the difference in the mortgage still owed. On rare occasions the house can sell for more than the mortgage is worth. The homeowner is paid the difference.
  
  

Eviction Process

• The foreclosure process only transfers ownership. If the homeowner is still in the home, a formal eviction process has to be initiated by the bank to remove the family. The bank can choose to submit a legal notice advising the residence to vacate in 72 hours or work on a rental agreement. Eviction notices can't be enforced without a court order. Once the order of the court has been issued, the average vacate time is 8 weeks.
  
  

Impact on Credit Score

• After a foreclosure, there could be a significant decrease in the homeowner's credit score. Other financial institutions will be wary of lending money to those who have foreclosures on their record. If your other credit accounts are in good standing, it could reduce the impact of the foreclosure. After a foreclosure, it's likely that you will have to pay higher interest rates and pay a larger down payment for major purchases.