A mortgage is really a loan that uses some sort of real estate as collateral.  The borrower promises to pay the lender a certain amount of money broken into monthly payments over a period of years (typically 30) and once it is all paid off the borrower becomes the owner of the property.

If the borrower fails to pay, the lender must take action to get possession of the property and this is basically called a foreclosure.  What happens is the lender sends notice to the borrower to bring the loan current.  If the borrower fails then the property is usually auctioned in a public auction.  In some cases, the borrower can work a deal with the bank and avoid the bad credit that goes along with the foreclosure.

With your mortgage you probably also signed a promissory note.  This is a piece of paper that includes the principal amount of the loan, the rate of interest and the date the loan matures.  It can also list the payees right in the event that the borrower defaults on the loan.

In some cases, loans get sold from institution to institution and the promissory note should go along with it but, if it does not, this may be one way to stall the foreclosure process.  So, if you receive a foreclosure notice from your bank asked them to produce a promissory note.  If they don’t have it, you may be able to stall for time or even renegotiate your mortgage.

You might also have a deed of trust on the property in which case your defaulting on the mortgage empowers the lender to sell the property.  While the procedure for this is different in every state,  basically the trust deed allows the lender to foreclose to recoup his losses.

Deciphering all the legal mumbo-jumbo in your mortgage and foreclosure documents can be intimidating.  If you’re facing foreclosure, you might consider hiring a professional who can help you wade through all this stuff and give you advice as to how to get to your foreclosure in the best possible way.