What is “foreclosure”?
Foreclosure is the process that a Lender may use to take away the title to real estate to collect a debt. A Lender with either a mortgage or deed of trust can foreclose on real estate. Most often, the Lender has financed the purchase of real estate. However, a Lender who has provided a “home equity line of credit” also has the right to use foreclosure to collect on an unpaid loan. The process of foreclosure is regulated by state law and by the terms of the mortgage or deed of trust.
Mortgage foreclosure is the process a bank or mortgage company uses to take back ownership of real estate when the homeowner hasn’t complied with the mortgage agreement. Most often, that simply means that the homeowner couldn’t keep up the mortgage payments. The foreclosure process may differ depending upon your state. Generally, the downward spiral into foreclosure begins when your loan payment becomes 16 days overdue. At that point, your mortgage lender may try to contact you to work out a repayment schedule to bring your loan current. If your mortgage payment becomes 30 days late and the next month’s payment looks suspect, the collection calls will come on a regular basis. If your payments fall 90 days behind, the mortgage company will likely refer your mortgage to an attorney that will start formal foreclosure proceedings. Again, the foreclosure process varies by state, and the best source of information about how the foreclosure process might proceed in your case is a local attorn
A legal process by which property that was used to secure a debt is sold in order to satisfy the debt. This occurs when there has been a default in payment on the debt. When a borrower has been unable to make the scheduled payments on his or her mortgage loan for an extended length of time, the lender may feel that the loan has been defaulted, and will undertake legal proceedings in order to repossess the property. Any equity the homeowner may have built up in the home is lost, and the homeowner will have to vacate the premises. Laws on how long a homeowner has before a lender can start foreclosure proceedings vary form state to state (see STATE LAWS) Banks DO NOT want your home. An average foreclosure costs a bank $50,000.00. In this tight credit market, banks can not afford to take back your home. The best option for you, and your lender, is to find a way to avoid foreclosure.
Foreclosure involves a lawsuit in which a bank, mortgage company, or other lien holder seeks to take an owner’s property to satisfy a debt. The bank or lender may actually take ownership of the property or have the property sold to pay off the debt. As a result of the foreclosure, the owner loses whatever rights he or she had in the property. Examples: If a homeowner fails to pay his or her mortgage loan on time, the lender that holds the mortgage on the house can bring a foreclosure action against the homeowner. Similarly, if a homeowner borrows money from a bank using a house as collateral (security) and fails to pay, the homeowner can lose the house to the bank in a foreclosure action. Foreclosure is a court process, and you must follow the process carefully to protect your rights. The rights talked about in this pamphlet are very complex. Please do not use this pamphlet without checking with a lawyer. NOTE: If you have a VA, HUD, FmHA or FHA insured mortgage, you may have additiona
