subject: What Happens During A Foreclosure Process? [print this page] The word foreclosure strikes fear deep in the core of so many people it has been given the same status as a swear word in some countries. You must not even bring it up unless you would like to feel the pent up anger and resentment of the general population against the greedy financial institutions that caused the collapse of real estate market.
A foreclosure is when the financial institution that lentthe homeowner themoney to purchase a home takes court action against the homeowner to take the house and sell it to another person.
The homeowner does have rights to be able to make amends and pay back the debt to keep the house. The lender in wanting to repossess the
house tries to take action to stop the homeowner from being able to redeem his property. This all occurs when the homeowner stops making the monthly payments owed to the lendor. It can do untold damage to your FICO score (credit rating) and is usually a very long drawn out process.
Losing your home is a very emotional and stressful time for the homeowner.
Two kinds of foreclosure procedures types typically run in the USA, they are the most popular.A "Judicial Foreclosure" is 1 such way to foreclose.
This is when the lender takes the property andsells it. The courts oversee this process carefully. Excess cash made from reselling the property is redistributed to pay off the loan capital and the foreclosure fees.
Any monies left over is then used to pay off other lien holders.
The other most popular used process is called a "Foreclosure by Power of Sale". This type of process may be implemented without any problem only if the original mortgage contracts between the lender and the borrower contains such clauses to permit it or if a "Deed of Trust" was involved. This entails that the sale of the property has to be undergone by the home-owner.
There are no courts involved and most of the time it usually is faster than selling by the first process. There are other ways of going about foreclosing but they're not usually used because of their limitations.
Keeping up with your monthly payments will keep you from getting into this situation. But with the state of affairs in the economies of the world lately, many people have found that it has been inevitable for them. Although, you do not have to necessarily throw in the towel when you get confronted with that dreadful notice. Employing the services of a professional who is a true expert in this type of real estate transactions and foreclosures is very, very important in protecting you.
Also, don't feel intimidated to go and talk to your lender. Many legal mortgage lenders are more than willing to meet the home-owner halfway and work out more lenient installments for a short period (like a year) provided that the owner comes to them early and is willing to sit down and talk candidly with them. Many government credit rehabilitation programs have been created to assist in any way possible in saving homes from the traumatic process that is involved during any foreclosure of a property.
by: Thoriso Mashego
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