When a homeowner is 3 months payments behind in their monthly payments to the bank, the bank has the right and obligation to start a foreclosure proceeding. This is the only way the bank can reclaim its asset – the house. Landlords evict to remove an occupant from the house, banks foreclose.

The bank really doesn’t want the house back though. They are in business to make money – not buy houses. The want a performing loan, meaning they want someone to be paying the monthly payments as agreed. When all else fails and the homeowner can’t make those payments do to loss of a job, death in the family, whatever the circumstances, the bank will foreclose.

Remember that the bank doesn’t want the house back. So they will deal to keep that from happening. They can restructure the loan with the homeowner which is called forbearance, they can sell the property at a loss just so they don’t gain ownership through the foreclosure process. This is often called a short sale.