The mortgage foreclosure process is different from the tax foreclosure process but is the more common one. When people are in foreclosure because they fail to pay their mortgage payments, the bank will foreclose on their home and the mortgage foreclosure process will begin.

Different states have different rules for the mortgage foreclosure process. Lenders have to follow the rules when filing foreclosure on homes. Some states have more rules to follow than others but most of them have the same basic mortgage foreclosure process.

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.

The next step in the mortgage foreclosure process is the notice of default or even a letter threatening foreclosure. Once the account is in default, the lender will send a letter of default to the borrower. This is a scary time but the lenders are still open for negotiation at this point.

The notice of default often accompanies the notice of trustee’s sale and they are served to the homeowners. In some states, these notices are mailed by certified mail and in others, although more rare, they are served by the Sheriff.

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.

Before the sale of the foreclosed home begins, the homeowner has the last chance to pay off the debt in full to stop foreclosure. However, most people cannot find the money to pay all off. Banks are still open to negotiation at this point if the deal is good enough. Usually a homeowner has until six days before the auction to pay off the mortgage balance and reclaim the property.

On the actual day of the foreclosure sale, good foreclosure properties receive bids from people looking to buy cheap homes. The mortgage foreclosure process ends with the sale of the home to the highest bidder. Some of these bidders are real estate investors looking for good investment properties.