How does a Foreclosure Work?

While foreclosure laws vary by state, in general, a foreclosure works by the lean holder obtaining a court order to take custody of the property held under the mortgage that they then sell to reduce the amount of the note collateralized by the property. Lien holders must notify all interested parties in writing of all foreclosure proceedings giving the property owner the opportunity to seek relief in court. Bankruptcy laws may provide a way to lower the note and change the structure of the mortgage allowing families to stay in their homes.