If a homeowner fails to make payments upon the mortgage, the lender may foreclose on the property.
Depending upon the terms and agreements made within the original mortgage contract, the lender may do a statutory foreclosure or a judicial foreclosure. A statutory foreclosure can be performed without bringing a court action. The lender does have to follow strict state regulations as to the proper notices and opportunities to provide payment by the homeowner before a sale of the property occurs. This procedure is relatively fast.
If a judicial foreclosure action is required, the lender must file a complaint with the court system and go through the litigation process to obtain the right to foreclose on the property. In several state jurisdictions, the homeowner is allowed the right to stay in possession of the home until the foreclosure process is finalized or a sale of the home occurs.
Since some lenders prefer to avoid the cost of foreclosure, they are sometimes willing to work out an agreement with the homeowner. The lender may accept "interest only" payments or partial payments for a while in order to assist the homeowner. There are detailed regulations regarding foreclosure procedures. It is best to consult with an attorney if your home is endangered by a foreclosure proceeding.