A series of missed payments on your mortgage loan can lead to the lender filing a Notice of Default with the County Recorder or relevant equivalent. Once the notice has been served you have a period ranging between 45 days to 1 year, timescale depending on the state, in which to ‘cure’ the deficit by either making up the missed payments or arranging the disposal of your home.

Choosing to make up the missed payments will allow you to pursue refinancing options with the bank including taking out a short term loan for the missed payment amount to be paid over 24 to 36 months. Otherwise the bank may decide to add the missed payments to the end of the existing loan.

If you decide to dispose of your home instead of meeting the missed payments you are able to conduct a traditional sale, do a short sale or arrange for a Deed in Lieu of Foreclosure. Pursuing a traditional sale is advised if you have equity in the property but you may also want to conduct a traditional sale even if it may result in losing some money as this method will not affect your credit rating unlike a short sale or a Deed in Lieu of Foreclosure. Whichever option you decide upon will ensure your credit remains healthier than if foreclosure is forced.

Selling your home to an investor for less than the amount owed is deemed as a short sale. The bank will accept this as payment in full allowing you to walk away with the debt removed but your credit may suffer. This is often a win win situation for the bank as the payment will mean they avoid the cost of foreclosure.

Deed of Foreclosure is similar to a short sale but the investor is removed and you simply hand over the deed to the house to your bank. The bank accepts the house as the mortgage paid in full and you walk away without any debt owed.

Sometimes it is difficult to work out an arrangement with the lender and the bank will foreclose on your house. The bank is then entitled to sell the house to the highest bidder at a sheriff’s sale or auction. In some states you will be given a Redemption Period in which you are able to buy back your home for the auction price.

If you have not left your home within the allocated time given by the County Recorder you will be evicted.