What happens if the lender initiates foreclosure proceedings while the homeowner is in compliance?

Lender foreclosure proceedings can begin only when a homeowner is in default on his mortgage payment. If you are in compliance with all the terms of your loan, a lender cannot carry out a foreclosure against you. If you receive notice of default when you are not late on payments:

• Contact your lender to provide proof of payments. Make sure you check your bank statements, mortgage statements and other paperwork to ensure that payments are being applied properly. If they are not, contact the bank and lender immediately to trace the source of the mistake
• If your lender does not immediately stop foreclosure proceedings upon receiving proof that you are in compliance, contact a lawyer immediately. Your lawyer can take action to have the lender stop the illegal collections and foreclosure activities against you, as well as to reverse any fees or charges that were improperly applied if the lender believed erroneously that you were not making payments. 

In most states, foreclosure has to go before the court, so the bank won't just be able to take your house if you've been paying up. Still, hiring a lawyer when dealing with lender foreclosure proceedings is vitally important to protecting your rights.