The foreclosure process generally begins four to six months after a homeowner begins missing payments. The lender initiates the process by sending the homeowner a Notice of Elections and Demand and a foreclosure auction is scheduled for about 4 months from the date of the initial notice. This process may be extended week to week if you are working towards a solution with your lender.
The most important thing to understand when facing foreclosure is that the worst thing to do is to be passive. If you choose to do nothing, your property will be sold at auction and you will be evicted from the house. Foreclosure has a major negative impact on your credit record and can remain on your credit for up to ten years. This detriment to your credit is irreparable and has negative effects on all credit accounts including credit cards. A foreclosure has a negative effect of 200 points on your credit score while a short sale has a negative impact of just 50 points. You may also end up owing a significant amount in taxes if your lien holder imposes a deficiency judgment, or 1099 tax forms can be issued creating additional tax liability for an investment property.