How does foreclosure occur? What commonly causes/leads up to it?
A foreclosure occurs when a homeowner (borrower) fall behind on their monthly payments or fails to pay property taxes. Generally, after three months of late payments, a lender will begin the foreclosure process. Foreclosures are commonly caused by one or a combination of events, including an injury or illness that causes a homeowner to miss work, a job loss or drug and alcohol abuse. In many cases, a divorce can lead to foreclosure. Some people refinance their homes or take out an equity line of credit and the extra monetary obligation — caused by higher interest rates or adjustable rate mortgages (ARMs) — drains their savings and monthly income.
