How Does Home Foreclosure Work?

In today’s faltering economy, homeowners are facing foreclosure in increasing numbers. With mounting debt, rising unemployment rates, and without of accessibility to credit, many families are falling behind on their bills and are ultimately left with no option but to default on their mortgages.

With home foreclosure a predominant topic in the news, it is important to understand what foreclosure method and how the time of action works.

Foreclosure is essentially the forced sale of a home. When a borrower defaults on his or her mortgage payments, the lender (or other lien-holder) then has the right, as stated in the mortgage agreement, to legally repossess the character. The mortgage holder may then offer the character for sale. The proceeds of the sale must be used to satisfy the noticeable loan balance. After the loan is settled, any remaining lien-holders are reimbursed, and the remaining equity (if any) is returned to the borrower.

The actual procedure of home foreclosure varies from state to state, but the same basic course of action applies in most situations.

First, the loan becomes delinquent, meaning the borrower has ceased to make payments; the borrower goes into what is called default. The default period lasts for approximately three months, during which time the lender attempts to contact the borrower to position repayment.

Once the loan is in default, the lender files a public Notice of Foreclosure announcing the intent to foreclose on the character. The borrower will then be notified, either by personal service or by publication in a newspaper, that the character is being foreclosed.

At this point, a date will be set for a court proceeding. While the court date is pending, the borrower may continue to negotiate with the lender to settle upon a repayment plan. During this period, the borrower may keep in the home. If no settlement is agreed upon, the foreclosure will generally be granted by the court.

Once the lender has been granted the foreclosure, the occupants may be evicted by the sheriff and the character sold. Foreclosure similarities are sold either by normal real estate procedures or by public auction. Depending on the exact procedure for each state, the complete course of action can take anywhere from 2 months to a complete year.

After the Notice of Foreclosure has been filed, a homeowner will receive many mail offers to refinance or buy the home. Not all of these are authentic, and it is advisable for the borrower to negotiate directly with the mortgage holder in any attempt to prevent a foreclosure.

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