We do our best to make information easy for our clients to understand. The following is our basic guide on foreclosure including common terminology and principles.
What Is A Foreclosure And Why Was This Notice Sent To Me?
A foreclosure is an action where a bank moves to take possession of a house or other property that they provided monetary lending or some other type of consideration for. If a person does not make the regular payments on the mortgage (the loan from the bank) or there is some other type of break in the agreement between the person and the lender, the lender may move for a foreclosure action which is basically a lawsuit filed in the local court to recover the property that was the subject of the loan.
Reasons For Foreclosure
Not all cases arise out of a debtor failing to make payments on their mortgage for personal reasons. There are other cases where being involved in a foreclosure could be the result of external factors such as an event or natural disaster that decreased the property mortgage amount. In these cases, a foreclosure is still likely to take place for the failure to meet the terms of the original loan.
When a loan agreement with a lender is broken, a lender is likely to bring an action in the local court in the form of a foreclosure to recover the property that is the subject of the loan.
How Does The Foreclosure Process Work?
Once a lender has initiated a foreclosure action pursuant to a loan agreement that has entered default, the borrower is notified of this action and provided with the corresponding notices pertaining to court dates and hearing times. Simultaneously, a borrower will be able to present various defenses for their foreclosure action and any other additional information that may be relevant to the matter. Once this takes place, the court will rule either in favor of the lender or borrower and further action can take place from there.
The Pre-Foreclosure Process
The pro-foreclosure process is an opportunity for the lender and borrower to work out an arrangement to prevent the foreclosure from moving forward. It is typically advantageous for both the borrower and lender to avoid the foreclosure process due to costs and fees.. This is why there is usually an opportunity and in some states it is mandated to participate in the pre-foreclosure process.
What Happens If A Foreclosure Is Found In Favor Of The Bank?
If a foreclosure action is ultimately found in favor of the bank, the bank will be provided with a date to take possession of the property. Once this occurs, the property may be listed for sale or auction depending on the interest of the property owner.
What Is An Auction?
An auction is an event held by the local court or sheriff to recover a property that has been the subject of a foreclosure action for the amount that is presented by the highest bidder. The Sheriff's Sale is an event that takes place regularly by the local court to attempt to recover amounts that are proportional to the property at stake. Sometimes the original owner will participate in this to make sure that a property is not auctioned off for too little.
What Are Some Ways To Prevent Foreclosure?
There are various methods and strategies for taking on a foreclosure action. One way involves participating in a foreclosure assistance program that can help work out arrangements between the borrower and the lender. If this does not work, there are some other potential methods and solutions as well. Including but not limited to; (1) selling a property, (2) deeding the property back to the lender, or (3) filing bankruptcy. There are specific considerations to be made for each method and usually it is best to speak with an expert in the field before committing to any particular option.