When a person is unable to make payments on money which has been borrowed for a residence this is called foreclosure. Most often a person will pay the money back in monthly payments. If payments are not received by the lender, there are steps which are taken in regaining ownership of the property. This is called foreclosure.

There has been a huge boom in owning homes in the past couple of years. Many purchased residences they weren't able to afford. There are others who purchased their homes which were affordable at the given time, but were unable to pay on time later. In either situation of falling behind on mortgage payments, initiation of the foreclosure process is inevitable.

Here is how foreclosure works (though it usually varies from state to state):

A NOD letter (Notice of Default) is sent to borrower.

A timeline is specified in which the borrower is allotted time in order to catch up on late fees and due payments.

If the borrower fails to catch payments up, the documents are filed by lender to proper authorities so the house can go up on the market.

Lender recoups mortgage amount as well as late fees from selling of property.

If lender is unable to sell property, the lender becomes the property owner. This term is also known as "REO" (Real Estate Owned by Bank).

Here are a few possibilities of what a buyer can attempt to do should they fall behind in mortgage payments:

Speak with your lender and see if there is any payment plan which can be worked out.

Place your home on the market to sell in hopes of selling at a fast pace. If the market is slow, this is a bad idea. If you can sell your home quickly, you can then pay your lender from the money made from sale (This is only as long as your sale price and equity is more than loan amount).

You can refinance the property if you have enough equity. You can then catch up on payments you are behind on.

If borrower returns ownership voluntarily, the lender can then forgive outstanding debt. This is known as a "short sale." This method must be agreed upon and discussed, otherwise buyer's credit could be affected.

Filing bankruptcy is another option. The laws concerning bankruptcy are very complicated. Any borrower should discuss this with a professional qualified in this area to understand fully how bankruptcy works.

The above descriptions should help in giving a basic idea about foreclosures. Each process does vary by state. In some cases, the borrower may be entitled to the redemption right after foreclosure. Consulting a qualified professional is your best bet before making any rash decisions on home foreclosure process.