What is foreclosure, and how does it work?

Foreclosure is how a lender collects an unpaid mortgage: it sells the home. It doesn't start the day you miss a payment. Your mortgage company usually has to wait until you're more than 120 days behind. After that, your state's process takes over, through a court or without one, and it ends in a public sale.

You're not the only one facing this. In May 2026, mortgage companies started foreclosure on 7,979 loans backed by Fannie Mae and Freddie Mac, 577 more than a year earlier, according to the Federal Housing Finance Agency.

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By Ross Kilburn · Founder, American Default Research
Updated
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Foreclosure can't start until you're more than 120 days behind

That wait comes from a federal rule, part of what's called Regulation X, and it covers most mortgages on the home you live in Source Regulation X. Even small mortgage companies, which skip many other federal steps, have to wait the 120 days Source Regulation X.

Those months aren't quiet. Your The company that collects your monthly mortgage payments. This may not be the same company that originally gave you the loan. Learn more → , the company you send your payment to, has to try to talk with you no later than the 36th day you're behind, and send a letter about the ways it can help no later than the 45th day Source Regulation X § 1024.39.

If you send it a complete application for help early enough, it can't start a foreclosure while it reviews you Source CFPB. Your rights while you apply.

Whether foreclosure goes through a court depends on your state

It depends on your state. In some states the lender has to sue you, and the case goes through a court where you can raise defenses. In others, the lender can foreclose without going to court, by following a series of written notices that state law and your mortgage papers allow Source CFPB.

Of the 50 states and Washington, D.C., foreclosure usually goes through a court in 21 and usually happens without one in 29; in 1, both are common, by our count of state law.

Foreclosure through a court and without a court, side by side
Step Through a court Without a court
How it starts The lender files a lawsuit, and you get court papers with a deadline to answer. You get written notices that your state's law requires.
Your chance to object You can answer in court and raise defenses. There's no court case unless you start one.
How it ends A public auction. The home goes to the highest bidder, and the lender can bid too. The same.

How long each kind takes.

The six steps of foreclosure, from a late payment to the sale

The names and deadlines change by state, but most foreclosures follow this order.

  1. You fall behind

    Late fees, calls and letters start. This is when you have the most choices: a pause on payments, a payment plan, or a loan modification, a lasting change to your loan's terms.

  2. Foreclosure starts

    Once you're more than 120 days behind, the first foreclosure paper can come. Through a court, that's a lawsuit, and the court papers say how long you have to answer. Without a court, it's the first notice your state requires to be recorded or published Source Regulation X.

  3. The waiting period

    State law sets how much notice you get before a sale. It's still a good time to apply for help. A complete application that arrives more than 37 days before a sale generally stops your mortgage company from asking for a court order of sale or holding the sale while it reviews you Source Regulation X. Your mortgage or your state may also let you catch up in one payment, called Paying all missed mortgage payments plus fees to bring your loan current and stop the foreclosure process. Learn more → , up to a cutoff.

  4. A sale date is set

    You get notice of when and where the sale will be. Inside 37 days, a new application doesn't have to stop it. What can still stop a sale.

  5. The sale

    The home is sold at a public auction to the highest bidder. Your lender can bid too Source CFPB.

  6. After the sale

    The buyer usually has to go through your state's eviction process before you have to leave. Some states let you buy the home back for a time after the sale. If the sale brought in less than you owed, some states let the lender sue for the rest; if it brought in more, the extra may be yours. What happens after the sale.

Foreclosure starts are up from a year ago

In May 2026, the latest month the Federal Housing Finance Agency (FHFA) has reported, mortgage companies started foreclosure on 7,979 loans backed by Fannie Mae and Freddie Mac, the two government-sponsored companies that back many U.S. mortgages. FHFA counts a foreclosure as started when the loan is sent to a lawyer to begin the legal process Source FHFA.

FHFA prints that count one month at a time. We keep every month in one record so you can see the trend. Starting from 5,480 in June 2024, it peaked at 9,586 in December 2025. It covers only loans Fannie Mae and Freddie Mac back, not FHA, VA or bank-held loans.

More foreclosures started on Fannie Mae and Freddie Mac loans than a year earlier

Fannie Mae and Freddie Mac single-family loans referred for foreclosure each month, United States, June 2024 to May 2026

4,000 6,000 8,000 10,000 A year earlier: 7,402 Jun 2024Sep 2024Dec 2024Mar 2025Jun 2025Sep 2025Dec 2025May 2026 May 2026 7,979 4,000 6,000 8,000 10,000 A year earlier: 7,402 Jun 2024Dec 2024Jun 2025May 2026 May 2026 7,979
Source: Federal Housing Finance Agency, Foreclosure Prevention and Refinance Report, through May 2026 American Default Research · americandefault.org/help/foreclosure/how-it-works/

The full monthly record, with a download, is on our foreclosure starts on Fannie Mae and Freddie Mac loans page.

Questions about how foreclosure works

What do you lose in a foreclosure?

The home, and the money you've built up in it, unless the sale brings in more than you owe. A foreclosure can stay on your credit report for up to seven years. A new Fannie Mae loan usually means a seven-year wait after one.

Source 15 U.S.C. § 1681c Source Fannie Mae B3-5.3-07

How many missed payments before foreclosure?

For most home loans, a foreclosure can't start until you're more than 120 days behind, about four months of missed payments. See what happens in those months.

Source Regulation X

How long does foreclosure take?

Homes that finished foreclosure in the second quarter of 2026 had been in the process for 563 days on average, according to ATTOM, a property data company. It varies a lot by state. See how long it takes in yours.

Source ATTOM

Can a lender foreclose without going to court?

In some states, yes. The lender follows a series of written notices instead of filing a lawsuit. Check your state.

Source CFPB

Can I stop a foreclosure once it starts?

Often there are still ways until the sale, though none is guaranteed: catching up, applying for help, selling, or bankruptcy. Ways to stop a foreclosure.

Your state sets the foreclosure deadlines. Find yours here

Your state decides whether foreclosure goes through a court, how much notice you get, and whether you can buy the home back after the sale. Each state page lists the steps, with the law behind each one.

Protect yourself from scams

The FTC and CFPB describe these warning signs and the rules behind them:

  1. Upfront fees for promised relief are a warning sign. Under FTC mortgage-assistance rules, most companies that sell mortgage help cannot charge until a homeowner accepts a written offer from the mortgage company or lender. A separate FTC rule covers debt-relief companies that sell by phone and ties fees to a completed debt arrangement. It bars a fee until at least one debt has been settled or changed, the customer agrees to the arrangement, and the customer has made a payment under it. The FTC describes a narrow exception for lawyers who give help as part of the practice of law and are licensed in the state where the client or dwelling is. The lawyer follows that state's rules for attorneys, and advance fees are placed in a client trust account before services begin under state trust-account rules.
  2. HUD-approved foreclosure-prevention counseling is free. HUD’s national counselor line is 800-569-4287. The CFPB counselor finder lists agencies and their services. If an organization charges for help described as free HUD counseling, the CFPB finder can verify the agency and its listed services before any payment.
  3. A request to sign over a deed is a warning sign. The CFPB identifies title-transfer schemes among foreclosure-relief scams. Signing over title can mean losing ownership of the home; a lawyer can explain what a proposed document would do.
  4. Foreclosure protections depend on timing and the loan. Regulation X generally bars the first foreclosure notice or filing on a principal-residence loan until the borrower is more than 120 days behind, subject to exceptions. A complete assistance application can delay some foreclosure steps, but that depends on when it arrives; it does not necessarily stop every step. The CFPB warns about promises to “save” a home.

Fraud reports: CFPB · FTC · state attorney general offices.

Free help with foreclosure

A HUD-approved housing counselor. A housing counselor works at a nonprofit approved by HUD, the federal housing department. Their foreclosure help is free, and they can help you talk to your mortgage company Source CFPB. To find one, call HUD at 800-569-4287, use the CFPB's counselor finder, or see our directory.

In Spanish. ¿Qué es foreclosure? Ayuda gratis en español

Legal aid. Legal aid offices give free legal help to people with low incomes, including help with foreclosure. Find yours at lsc.gov or in our directory.

You now know the order a foreclosure follows and where you can still act. Before you're 120 days behind, every choice is open, and a complete application for help that arrives more than 37 days before a sale generally holds off the sale while it's reviewed. See what still works where you are. A counselor can go over your letters with you before you decide anything.

Sources

We write with assistance from AI tools. Figures come from the data and sources named on this page.