Foreclosure is a legal process that allows a lender to sell or take ownership of a property if the person who took out the loan does not repay it. There are usually six steps to foreclosure depending on the state. It begins with a payment default where a homeowner misses the first payment. If a homeowner has not contacted the lender and made payments on the loan within four months, a notice of default (NOD) is sent. After a NOD is sent it gives the owner 30 days to work with a lender before the foreclosure process begins.
Each state has a different way of doing foreclosures. Some states allow nonjudicial foreclosures. This means the lender just files some papers and the process starts. New Mexico is a judicial foreclosure state. This means the court approves each step in the process, which makes it longer. After going through all the legal steps, the property is put up for auction to the public. If it doesn’t sell at auction, then the lender tries to sell it through a broker. The final phase of the foreclosure is eviction which happens after the house is sold to a new owner or the lender keeps it. This process is often long and drawn out, taking many months or even years to go through the legal hoops. However, it is possible to avoid foreclosure through several means, a deed in lieu of, loan modification, a repayment plan, etc.