If you can’t keep up with your monthly mortgage payments, it forces the lender to take legal action in accordance with the promissory note you signed to obtain the mortgage note. They will seize the property and try to recoup their losses by auctioning it or selling it. The main goal of the bank by loaning you the money for a house purchase is to make a profit through the interest payments that you pay over a prolonged 15, 20 or 30 year mortgage. So, if you stop making those loan payments you are “defaulting” on the financial agreement between you and the bank. Banks don’t like to lose money. They are not in the business to help you; they are in business to make money.
The lender can initiate the foreclosure process anywhere between 90 – 120 days after you miss a payment. You must miss mortgage payments repeatedly in order for the foreclosure process to start. But if this happens and the foreclosure goes through, your home will be put up for auction. If you’re still living in it and the home is purchased by another party through a bank sale, your untimely eviction can be as swift as within two weeks, or up to 45 days from the auction date.
A bank foreclosure affects your entire financial life. Once the foreclosure is finalized, all money that you have paid on your home is lost. Damage to your credit from a foreclosure will last at least seven years, and throughout this time, you may not be able to obtain loans for housing or vehicles.