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In the lawsuit the most common scenario is that the borrower doesn't respond and the lender receives a judgment by default and can proceed to have a referee appointed by the court. The lender then advertises the sale for four to six weeks and then, if full payment hasn't been made, a public sale is held, typically on the courthouse or town/ciy hall steps. The time frame for this entire judicial foreclosure process is usually between 4 and 6 months, although the process can take as little as 3 months to as long as 12 months.

In a judicial foreclosure, the lender files a lawsuit agaist the borrower to get the property. Like any other lawsuit, it begins with the serving of a summons and complaint upon the borrower. Along with any other parties with junior liens or encumbtances against the property. If the borrower responds, the court holds a hearing and rules that either the borrower has presented a legitimate issue and alternate payment terms are arranged or the lender is permitted to foreclose.

Although the foreclosure process varies from state to state,the main difference is whether the loan is secured with a mortgage that reqires a judicial foreclosure or by a deed of trust, in which case the nonjudicial process is used.

An owner who has received the Notice of Default is likely to be motivated to sell because she knows that the lender has begun the formal steps toward repossessing her property. But not all owners facing foreclosure are aware that the late charges, penalties, and hefty legal fees further erode their shaky financeal position. They may not understand the logic that if they can't make their regular monthly payments, they're unlikely to catch up and pay all the additional costs, which can literally double the deliquent amount.

The first formal legal action in the foreclosure process is the filing of a Notice of Default. If the owner wasn't concerned when he first began missing loan payments, the filing of the Notice of Default should be a real wake-up call

This is the time when you want to offer a solution to the owner that'll get her out of the prolperty and preserve her credit status so she can purchase property in the future. Also, every owner facing a mortgage deliquency needs some cash to pay for moving and relocation cost. Understanding the motivation of the owner and lender can alow you to formulate an investment strategy that meets everyone's needs and allows you to own a property before it becomes heavily exposed on the local multiple listing service.

The period of time before the formal foreclosure begins is an important buying opportunity. You can get in ahead of competing investors to properties on which the owner is delinquent on mortgage payments or violating other conditions of her loan. The key is to track and locate these defaulting owners.

Every potential foreclosure begins when the owner misses a payment on her debt service or is notified in writing by the lender that a condition or tem of her loan isn't being met. The preforeclosure state is the period of time before the lender formally files the Notice of Default,which triggers the legal foreclosure process.

Article Source
http://en.wikipedia.org/wiki/Real_estate_owned

After completing the foreclosure process, the lender takes title, at which point it owns the property. The lender has to maintain and manage the property, so it turns the property over to asset managers in the lender's in-house real estate owned (REO) department. The asset managers may keep the day to-day property management in-house as well, but most lenders hire local property management firms to inspect the property, repair any emergecy items, and essentially operate the property until the lender can sell it.

Foreclosures are simply properties for which the owner has failed to meet his loan payment or other loan term obligations, forcing the lender, if they want to get some of their money back, to take over legal ownership and ownership and control of the property. Althogh more formal in a legal sense and more time consuming, a real estate foreclosure is similar to a lender repossessing the car from an owner who fails to make her monthly car payments.