How do foreclosures work?
Today, foreclosure is a big issue in the real estate market. So, what exactly does foreclosure mean? Suppose, you have taken a loan from your bank and you secured it against your home. You have been making regular repayments but fail to make a particular repayment on time and this arrear keeps recurring over a period. In such a situation, the bank or some other financial institution from whom you have taken the loan may forfeit your home legally. Your home is then sold by them to make up for their loss as well as to eventually pay your other debts. This legal procedure of selling a fixed property is known as foreclosure. This legal procedure takes place when any proprietor fails to repay their loans and the loan provider issues a non-payment notice. When the bank or mortgage company needs to recover the debt, they opt for the foreclosure method. There are two kinds of foreclosure Strict Foreclosure and Foreclosure by Sale.
Today, foreclosure is a big issue in the real estate market. So, what exactly does foreclosure mean? Suppose, you have taken a loan from your bank and you secured it against your home. You have been making regular repayments but fail to make a particular repayment on time and this arrear keeps recurring over a period. In such a situation, the bank or some other financial institution from whom you have taken the loan may forfeit your home legally. Your home is then sold by them to make up for their loss as well as to eventually pay your other debts. This legal procedure of selling a fixed property is known as foreclosure. This legal procedure takes place when any proprietor fails to repay their loans and the loan provider issues a non-payment notice. When the bank or mortgage company needs to recover the debt, they opt for the foreclosure method. There are two kinds of foreclosure – Strict Foreclosure and Foreclosure by Sale.
Today, foreclosure is a big issue in the real estate market. So, what exactly does foreclosure mean? Suppose, you have taken a loan from your bank and you secured it against your home. You have been making regular repayments but fail to make a particular repayment on time and this arrear keeps recurring over a period. In such a situation, the bank or some other financial institution from whom you have taken the loan may forfeit your home legally. Your home is then sold by them to make up for their loss as well as to eventually pay your other debts. This legal procedure of selling a fixed property is known as foreclosure. This legal procedure takes place when any proprietor fails to repay their loans and the loan provider issues a non-payment notice. When the bank or mortgage company needs to recover the debt, they opt for the foreclosure method. There are two kinds of foreclosure – Strict Foreclosure and Foreclosure by Sale.
When it comes to foreclosures there are many things that people simply do not know. Many people when buying real estate who want to make sure that they get the best deal possible think about foreclosures. However, unfortunately the different scenarios that they have in their mind are not necessarily going to be the case. There are many different reasons for why sellers go into foreclosures however many of them are unfortunately unavoidable. Some people either get laid off, fired, or they simply quit their job not giving them the funds that they need. Other people suddenly get medical conditions that enable them to be able to do their work. There are others who just have a whole bunch of bills that keep on accumulating that they need to pay for. Although this is not necessarily a bad situation, some people just get job transfers to another state. So I just laid out for you a few different scenarios for why people go into foreclosures but how do foreclosures work?
Desiree, it depends on a few factors. First, has the property already gone through the foreclosure process? It also depends on your state laws. Here in NY most foreclosures are “JUDICIAL” meaning the bank must file a lawsuite aka “lis pendens” in order to foreclose. Once the court process is completed, the judge will issue a judgement in favor of the bank and request the property be auctioned at the “Court House Steps” (doesn’t always happen on the steps). The bank will typically make the initial bid (most often the amount they are owed). If someone bids above that amount the bank gets what they are owed and the owner gets the rest. For example, suppose a bank is owed $200,000 and make that the starting bid at auction. Someone bids $205,000 and the bidding goes up to $215,000. The high bidder is awarded the property. They get 30 days to complete the sale. The bank gets $200,000 and the previous owner gets $15,000. Now lets say no one bids except the bank… then the bank is awarded the
