Most people who sign a mortgage don't intend to walk away from it. Still, unforeseen circumstances -- huge medical bills, lost jobs, divorce or eroding property values -- can overwhelm even the best-intentioned borrower. A simple twist of fate can leave you facing a homeowner's worst nightmare: foreclosure.

Communicate with your lender
Rest assured, where foreclosure is concerned, you and your lender are on the same side. Lenders want your money and the interest that comes with it, not your house. If you seem to be a good risk, the lender will offer to help keep your mortgage afloat. But be forewarned: If you seem like a bad risk, the lender may cut its losses by taking steps to foreclose and evict you as quickly as possible.

The key is to contact the lender before your debt gets the better of you. The sooner your lender knows of your problem, the more help it can provide.

The Foreclosure Spiral
Foreclosure processing begins when your loan payment becomes 16 days overdue. At that point, your mortgage servicer will try to contact you to work out a repayment schedule to bring your loan current. If your first payment becomes 30 days delinquent and the next month's payment looks doubtful, collection attempts begin in earnest. If your payments fall 90 days behind, the servicer will likely refer your mortgage to an attorney or other entity that will initiate formal foreclosure proceedings.

The Foreclosure Timeline
Day 1
Mortgage payment due today, the first of the month. Borrower misses it.

Day 16-30
Late charge assessed on payment. Mortgage servicer starts attempting to make contact to find out what happened.

Day 45-60
Servicer sends "demand" or "breach" letter to the borrower pointing out that terms of the mortgage have been violated.

Borrower given 30 days to resolve the situation by paying the delinquent amount.

Day 90-105
Servicer refers loan to foreclosure department. Hires local attorney or other firm to initiate foreclosure proceedings.

Depending on the state where the home is located, the servicer's representative may record a formal notice of foreclosure at the local courthouse, publish details of the debt in the local newspaper, attend hearings on the case and make appropriate court filings.

Day 150-415
House sold at foreclosure sale or auction. Wide time range due to different state requirements. Borrowers in states with judicial foreclosures, or those in which lenders have to retake property titles via the court system, can get almost a year to straighten out their affairs before the sale. Those in nonjudicial states have as little as two months.

Day 150-415+
After the sale, some states grant borrowers a "redemption period" in which they can still re-buy the property if they have the money. Others force them out immediately following the auction.