Foreclosure is a legal process that begins when a borrower fails to make their mortgage payments. When a home is foreclosed upon, the lender typically repossesses and attempts to sell the house. This happens because mortgage loans are secured by real estate, meaning your home is used as collateral. Since your home is the collateral, it can legally be seized by your lender when you fail to make payments. When you see a home listed as foreclosed, it means that it’s owned by the lender. There are two types of foreclosures: judicial foreclosure and non-judicial foreclosure. Judicial foreclosures can take place in all states and may be required in some. Under this type of foreclosure, your lender files a lawsuit with the judicial system, assuming your mortgage note does not have a power of sale clause. You as the borrower then have a period of time to respond and pay – and if you do not, your home can then be foreclosed upon and sold. After a home is foreclosed upon, the residents of the house may be issued a notice to quit letter or other warning to vacate the premises. The method of alerting a borrower of the threat of eviction varies based on your state. Facing a foreclosure and the possibility of being forced out of your home can be extremely upsetting and can make homeowners feel desperate.