Default

• Repossession or foreclosure of the home begins when a homeowner defaults on the loan. Common methods of default are failure to make monthly mortgage payments, making payments late and failure to maintain adequate property insurance as required by law. Lenders will file a notice of default with the county where the home is located.
  
  

Loan Reinstatement

• Homeowners have a right to reinstate the mortgage loan before the house is sold at auction. Each state has a grace period in which the homeowner may reinstate their loan, known as pre-foreclosure. Reinstating the loan is done by paying the entire amount due on the mortgage loan and any additional fees such as the attorney's fees for the lender.
  
  

Public Auction

• Loans not reinstated by the end of the grace period will be sold at public auction to the highest bidder. Auctions are usually held on the steps of the courthouse in the county in which the homeowner lives and the home is located. Bidders who purchase a repossessed home are required to pay the entire purchase price of the home the day of the auction.