What Is Foreclosure?
The foreclosure is a very important part of our banking system which protects the lender from having a loss. By a foreclosure process, the lender revokes a borrower’s right from the mortgaged property. This process is done by a court order which clearly states a particular date by which the borrower has to repay his debts along with all the foreclosure expenses. The borrower can retain the rights of the home by paying off the debts within this period. But if the owner fails to pay his debts then the lender can sell the property by the order of the court. Now let’s move further to understand about the foreclosure definition.
The foreclosure is the basic principle of a mortgage. Sometimes it can seem a little too much for a homeowner who is going through a lot of pain because of his financial situation. But it doesn’t have to be like this for most of the time. If an owner is going through a tough time for which he/she is unable to make the payment, then the person should talk to the lender as soon as possible. There are a few options which can help you to keep your home.
What Is the Foreclosure Process?
In the United States, the foreclosure process varies through the states. But generally, when the borrower doesn’t make the payments for at least four months the lender files and NOD in the County Recorder’s office. After that, the lender informs the homeowner about the situation usually by a notice. The borrower then gets a period of 60 to 120 days to repay his debts. But in many cases, the two parties can get to an agreement which eliminates the foreclosure process. The banks usually try to avoid the foreclosure process because of the expenses. Plus, there is no surety that the value of the property will be enough to cover the debts.
Now if the homeowner fails to meet the above criteria the property goes for the auction. The property is usually sold by the lender in an open auction where it gets sold to the highest bidder. But if the property doesn’t get sold it becomes the property of the lender also known as the bank-owned property.
So, in above we have briefly discussed what is foreclosure along with a foreclosure definition which I think is enough to get a complete idea about it. Now if you get into this kind of situation, we would suggest you consult with a lawyer.