A more thorough explanation:

Foreclosure is a legal process used by mortgage-holders to take mortgaged property from borrowers who default on their mortgages. When a borrower falls behind on mortgage payments, they enter default and start to accumulate late fees, legal fees, and other charges that are added to their outstanding debt. Mortgagees can negotiate with borrowers to adjust the terms of the mortgage, refinance, allow the borrower to sell the property, or allow the borrower to make up for missed payments. However, if negotiations fail, mortgagees can foreclose on the property.

There are two types of foreclosure: judicial and non-judicial. Judicial foreclosures require a court order, while non-judicial foreclosures do not. Non-judicial foreclosures may only be used where the mortgage has a power-of-sale clause, which most often appears in deeds of trust. Acceleration clauses are also included in most mortgages, which require borrowers to pay the rest of the loan immediately if they fall far enough behind in their payments.

Lenders frequently bundle groups of mortgages into mortgage-backed securities and sell shares of the securities to investors. As a result, some mortgages have many owners, making it difficult for borrowers to modify the terms of their mortgage. Similarly, mortgagees might have trouble proving that they own a mortgage they want to foreclose on.

Most states require mortgagees to sell foreclosed property at public auction. If the property does not sell at auction, the mortgagee keeps it and later resells it in a normal real estate sale. State laws vary regarding what happens if foreclosed property sells for less than the borrower's unpaid debt. In some states, borrowers are liable for the difference, while in others, they are not. If the property sells for more than the borrower's unpaid debt, the borrower gets the difference.

In some states, borrowers have a right of redemption that allows them to get back foreclosed property. If the original mortgagee owns the property, borrowers may exercise the right by paying the bank the unpaid balance of their mortgage. If the property was already resold at auction, borrowers must pay the purchaser whatever they paid for it. Rights of redemption only last for a limited time, which varies by state.

Once mortgagees begin the foreclosure process, it may take them six months or more to get clear title to the mortgaged land, depending on the state, foreclosure type, and type of mortgage.