In my state, Florida when you buy a house with borrowed money your lender will place a lien against the property using a Deed.

This instrument is recorded in the courthouse telling the world that you owe that that specific amount of borrowed money. You will also have the deed that transfers ownership (title) to you, letting everyone know that you won the house.

We want you to fully understand that the bank doesn,t want the house, just the lien against it.

A promissory note is also signed by you and recorded as a promise to pay back what you borrowed for the lender. It will outline the terms of how that money is to be paid back, meaning the payment amount, interest rate and the number of months it takes to pay back your loan. (Amortization)

It is when someone decides to stop making payments that you piss off the lender, and he starts doing all kinds of nasty things like having someone is collections dept. call you at work and at home. It is important to follow the time frames described here, as they will give you a full understanding of why lenders do what they do.

Collection call usually begin after the 16th day after the payment due date has come and gone. The 15 days are called the grace period. After that you can be assessed a 4% late payment fee, as described in the promissory note you signed at the closing.

If 31 days go by and you still haven't made a payment they will get much more aggressive and the Nasty Collection Department will call you and send letter to your work and home reminding you of the importance of sending your payment in immediately.

Most lenders will even accept a check by phone, for you payment and late fees to bring your loan current. Most lenders that report to the credit bureaus will have the ability to rate a 1x30 on your credit file. (1x30 = paid on time over 30days.

If 60 days go by with no payment, the lender does the same collection calls and more nasty letters will come.

Many lenders will mail a letter stating that the account is in default, now demanding two payments and tack on late fees. Some lenders will still allow the homeowner to make only one payment, which would show the account a rolling 30 days past due.

After 90 days a lender will typically only allow you to make the three payments plus interest and late fees.

This is the crucial point date that pushes the homeowner over the edge as far as the lender is concerned. To most people it's the point of no return. It represents a major cash requirement that panics most homeowners because the FORECLSOURE word is now being used.

Foreclosure is now being used in phone calls to you as well as in the now Threatening letters. Both aggressiveness and lender policies will dictate whether they will accept one or demand all the past due payments at this point.

If you're the investor looking at the deal, you want a lender who is flexible enough to take only one payment. Other factors will apply as to how flexible the lender will be.

These factors include amount of equity in the property, the attitude of the person handling the account, how the customer has paid the account, if the customer has lied to the lender and how many accounts the lender has in default and also the time of the year. The last quarter of the year October, November and December lenders are normally much more flexible.

Usually, after 120 to 180 days, a lender will contact the trustee (foreclosing attorney) to begin legal proceedings. At this point the fees add up quickly, anywhere from $250.00 to $2,600 and higher.

These fees increase on a daily (per diem) basis. In almost every case, after five months the lender will step aside and allow the foreclosing attorney to take over from that point on.

It then becomes the attorney's job to serve foreclosure papers to the homeowner in default.
Remember, foreclosure has not yet occurred, the homeowner still owns the house.

Once a homeowner is personally handed foreclosure papers, the attorney (trustee) now has the right to advertise the foreclosure by running an ad in the local legal newspaper.

Prior to the running of this ad, the defaulted homeowner will have a court date for which the individual has to write to contest or plead why foreclosure proceeding shouldn't continue.

This might be where the homeowner could say that the original note (loan) was sold and the new mortgage owner (lender) never gave an address to start sending payments. In most cases it goes uncontested and the entire foreclosure process continues.

The real problem becomes evident when the actual sale date has been set for the house to be auctioned off on the courthouse steps.

The foreclosure process allows the original lender to foreclose off any liens: 2nd and 3rd mortgage judgments and mechanic liens to get the title (deed) back in their name, so the lender can resell the property through an asset liquidation company or Realtor to get back the original amount of the loan plus their expenses.

If the auction is successful the property will be sold to the highest bidder who must pay cash within 30 days for the original loan amount plus expenses.

You should know, if a property is sold at public auction for higher than the loan balance incurred, all excess cash over the bid will go to the homeowner. If there is a 2nd mortgage the excess will go to satisfy that debt.