Mortgage foreclosure is a process connected with housing loans. Banks and other financial institutions lend home loans to borrowers, when they buy a home either for their own occupation or as an investment. Generally the repayment years of these home loans are 10 years; 15 years and 30 years. Every home loan is processed on application from the home buyer-borrower and after scrutinizing the documents related to the credit worthiness; financial standing; present and future household income of the applicant; documents relating to the property proposed to be purchased etc. before sanctioning the amount. A written agreement called "mortgage deed" (or deed of trust in some States) is entered into between the lender and the borrower.
It is this mortgage deed that defines the terms and conditions of the home loan - amount of loan; interest rate; years of repayment; amounts of monthly installments; and the rights of the lender to take action in case of non-payment of the home loan. Mortgage foreclosures are governed by Foreclosure Laws of the State. There are two types of foreclosure proceedings permitted by the law. One is to initiate and proceed with the foreclosure process through the County Court. This is judicial foreclosure. The other one is non-judicial foreclosure carried out of Court through a Trustee. State foreclosure laws permit either one or both foreclosure proceedings.
The object of mortgage foreclosure in both the cases is to sell off the property pledged as security, against the home loan at the time of borrowing, in the event of non-payment of monthly installments by the borrower-home owner, to get back the outstanding home loan. The foreclosure process commences after issuance of a Notice of Default by the lender to the borrower, to pay the arrears of payment and reinstate the home loan within a time frame. According to the terms mentioned in the mortgage deed, the lender sends a Notice of Default after filing a law suit against the borrower in the County Court (otherwise known as Lis Pendens) or a Recorded Notice after recording it in the local Recorder's office.
The Court passes an order for a Sheriff Sale public auction of the property concerned, on a specific date and time, for Mortgage foreclosures routed through Court in the event of borrower not responding. Similarly in the case of non-judicial foreclosure, a Trustee Sale public auction is scheduled to take place in a given date and time.
It should be noted here that mortgage lenders try to use foreclosure as a last resort, because it is expensive and time consuming. Before that, they are ready to compromise with the borrower in many ways - forbearance of lapsed installments; modification of the loan terms - rate of interest; years of repayment; refinancing the loan with some other lender; allowing a short sale by the home owner to settle the dues etc.
Mortgage foreclosures end up in disposing off the properties through public auction by a Sheriff Sale or Trustee Sale, where the highest bidder gets the property. In the event of the minimum bid not forthcoming, the lender repossesses the property against the loan dues to realize money by resale.
In any case mortgage foreclosures ensure that the lenders get back their money, sooner or later.
Search foreclosure homes by state or get more information on foreclosure homes for sale at ForeclosureRepos.com
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Kevin Simpson, GM Sales & Marketing
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