More and more homes have been going into foreclosure over the past year or two than ever before. One reason is the poor economy overall, but perhaps the biggest reason is the sub-prime lending fiasco of the past few years that allowed too many people to enter into mortgages they shouldn’t have or couldn’t keep up with.
When a home goes into foreclosure, the lender obtains a court order to terminate the agreement and take possession of the property back from the signer. This is usually the bank that underwrote the mortgage agreement or loan.
When someone takes out a home loan or mortgage, the bank or lender gets a security interest from the borrower, in essence pledging the house or property as security for the loan. If they default on the payment terms, the bank or lender can try to repossess, or foreclose on the property.
Besides failing to pay the mortgage note or loan, other lien holders can also foreclose the owner’s right of redemption for other debts, such as for overdue taxes, unpaid contractors’ bills or overdue HOA dues or assessments.
For a residential mortgage loan, the actual process of foreclosure proceeding can begin after the owner has failed to meet the mortgage agreement terms. Then the bank or creditor may look to take possession of the property so that they can recover their principle by reselling the property.
In foreclosure, the lender can opt to try and sell the property and keep the proceeds to pay off its mortgage and any legal costs. When this happens, this is considered as a lender foreclosing on the mortgage or loan. While there are some legal remedies, it is obviously much better to avoid going into foreclosure to begin with.
Related posts:
