With the ongoing economic downturn, more and more homes and properties face foreclosure over the past year or two than ever before. Besides the poor economy overall, the biggest factor is the sub-prime lending spree of the past few years that created ballooning payments and allowed people to enter into mortgages that they couldn’t manage and shouldn’t have been given.
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 a mortgage or home loan, the lender obtains a security interest from the borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults on payment, the lender or mortgage holder can try to repossess the property. This is a foreclosure.
While the main reason for foreclosure is failure to pay the mortgage note or loan, it isn’t the only reason. Property tax that hasn’t been paid, overdue HOA dues or assessments, even unpaid contractor bills are all problems than can lead to a foreclosure action.
The actual process of foreclosure on a residential mortgage loan can begin after the owner has failed to comply with the mortgage agreement. At that point, the creditor, usually the bank, would want to take possession of the property in order to try to 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.
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Tags: Finance, Foreclosure, home loan, Mortgage, mortgage lender, property foreclosure, Real Estate, refinance, tax lien