In the United States, a foreclosure is of two types, judicial and non-judicial, which varies by state. In the 19 states where all foreclosures are judicial, the court handles and oversees all aspects of the process. In the 31 states that have non-judicial foreclosures, attorneys are hired as debt collectors on behalf of lenders.

A lender hires an attorney as a debt collector, who, if the debt remains unresolved after four weeks of notices, sells the property at the county courthouse steps to the highest bidder. If the property has a good deal of equity, real estate investors will compete to purchase the home, often spending tens of thousands of dollars beyond the opening bid.

So what happens to all of that money? Initially, it goes to satisfy the payoff amount of the foreclosed mortgage, then to any junior mortgages, and finally to any unpaid taxes or liens against the property. Whatever remains after that should go to the owner of the house, but more often than not, it never reaches them because it goes unclaimed.