What Is A Foreclosure?

A foreclosure is a last resort for homeowners facing financial hardships.

According a report from ATTOM earlier this year, foreclosure filings were up 8% year over year in February. With this said, this rise is not an indicator that the housing market is on its way to another crash. Instead, this is a return to normalcy after the moratoriums on new filings that were put into place during the pandemic. The moratoriums expired in mid 2021, but many states extended these restrictions even longer. Therefore, home loan defaults are rising compared to the very low levels of recent years. We explain what a foreclosure is below.

Foreclosure defined

Foreclosure is a legal process that allows a lender, typically a bank or mortgage company, to repossess a property when the borrower defaults on their loan. Defaulting means missing a certain number of monthly mortgage payments, usually 3-6 months depending on your loan terms. The lender then takes ownership of the property and sells it to recoup their losses.

The foreclosure process

The specific foreclosure process varies by state, but it generally follows these steps:

  • Default: You miss a certain number of mortgage payments, usually 3-6.
  • Notice of Default: The lender sends you a formal notification that you are in default and foreclosure is possible.
  • Attempt to Resolve: In many cases, the lender will try to work with you to get caught up on payments or modify your loan terms.
  • Foreclosure Filing: If you can’t reach an agreement, the lender will file for foreclosure with the court.
  • Sale of the Property: The court will issue a judgment, and the property will be sold at auction.

The impact of foreclosure

Foreclosure can have serious consequences for homeowners. It can damage your credit score for up to seven years, making it difficult to qualify for future loans, such as a car loan or another mortgage. You may also be responsible for any deficiency, which is the difference between the sale price of the home and the amount owed on the mortgage.

Avoiding foreclosure

If you’re facing foreclosure, there are steps you can take to avoid it:

  • Contact your lender: As soon as you know you’ll have trouble making payments, reach out to your lender. They may be able to offer loan modification options or forbearance agreements to help you get back on track.
  • Explore government assistance programs: There are federal and state programs available that can help homeowners facing foreclosure.
  • Seek credit counseling: A credit counselor can help you create a budget and develop a plan to manage your debt.


It is important to remember that foreclosure is a last resort. By taking proactive steps and seeking help early, you may be able to save your home and avoid this process. Oftentimes you can explore a short sale with your lender as a way to sell your home and avoid being evicted out of and losing your home. For more information on the short sale process, click here or here.

Are you looking to buy or sell real estate in the South Florida area? We can help! Contact Natasha at Live South Florida Realty, Inc. today! Also, don’t forget to download the free Florida Home Search app for your smartphone or tablet.

By natasha moore

REALTOR® with Live South Florida Realty, Inc.