Lenders reserve the right to put a property up for auction after the foreclosure process, if a borrower defaults on the original secured loan. Foreclosure processes take quite a bit of time to unravel through all of the legal procedures. Several laws prohibit the repossession of a home, if it was not used in secured borrowing circumstances. Unsecured loans, such as credit cards, student loans and court settlements do not include securing a property as collateral for defaulting on a loan. You must review all contracts to make sure you are not in an agreement to secure your home against default on the loan to avoid encountering a foreclosure process.

Initiating a Foreclosure Process

The lender reserves the right to undergo the foreclosure process, if the borrower defaults on payments to their original loan terms. The lender will send out several warnings, letters and phone calls to the borrower warning the homeowner they are past due on their payments. Never ignore the phone calls or collection letters regarding your secured loan payments.

Ignoring the collection calls or letters will only put you at a higher risk of losing your home to the foreclosure processes. The lender will offer you a chance to renegotiate payments terms in most collection calls or letters. There exist less ways to halt the foreclosure process, once it has been initiated by the lender. The best route to avoiding foreclosure pertains to communicating with the lender before the loan goes too far into debt.

The lender will try to contact you initially in the event of defaulting on a loan payment. The bank reserves the right to continue sending collection letters or phone calls in order to give you fair warning of a pending foreclosure process. All lender initiated letters will be registered with the United States Postal Service as an attempt to collecting outstanding debt.

The homeowner still has a chance to sell their home or negotiate buyer terms with a new lender before the property is put up for auction. The lender puts the property in the local foreclosure listings in order to generate potential buyers, but the homeowner has the last say of their property all the way up to the day the home is sold in an auction.

The final stages of a foreclosure process pertain to the lending company’s auction for the home. A prospective home buyer will need to place the highest bid on the home in order to obtain legal rights to the property.

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