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Bank Foreclosures: What Are They Really

So you have heard the term again and again. You might even have some idea about it. But do you know about a bank foreclosure enough to explain it someone who asks you about it? Do the banking and mortgage terms sometimes befuddle you?

If you have been looking for someone to explain bank foreclosure to you in simple and straightforward way without using any jargon, then here are ten points that would serve the purpose.

10 IMPORTANT ASPECTS OF THE FORECLOSURE PROCESS

1.Foreclosure is a legal process by which a mortgagee (a lender, mortgage holder or a third party lien holder) can claim ownership of the mortgaged property under consideration in order to pay the mortgage by selling it off.

2.This strict measure is undertaken by the lender when the borrower (or mortgager) is unable to pay back the loan that had been used to buy a real estate property such as a house.

3.Depending upon the local state laws, foreclosure terms and conditions vary from one state to another. All the laws promote unbiased and fair foreclosure solutions to all the parties.

4.There are two types of foreclosure that are usually common to all the U.S. States.-foreclosure by judicial state and foreclosure by power of sale or non-judicial foreclosure. The other types of foreclosure are specific to the States and their local laws such as the Strict Foreclosure.

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5.Judicial foreclosure or foreclosure by judicial state involves filing of a lawsuit by the lender in response to a mortgage payment default by the borrower. The mortgaged property is sold to pay off all the debts under the supervision of the court.

6.Non-judicial foreclosure or foreclosure by power of sale does not involve a court of law. The mortgaged property or collateral property is sold off and the proceeds are used to pay all the unpaid debts.  

7.The proceeds from the foreclosure sale are used to settle the accounts of the mortgage holder, the other lien holders, and the mortgagor, in that order of preference.

8.The amount owed under foreclosure is calculated by the acceleration clauses accompanying a loan agreement. If a mortgager or lender wants to terminate a mortgage loan, a 30-day warning letter, callednotice of acceleration, is issued. This means that the mortgager party wants to take ownership of your home unless you can pay the entire loan balance in full. Without an acceleration clause, the lender or mortgagee can only wait till all the outstanding payments are made or persuade the court to sell of the property to settle accounts.

9.In strict foreclosure, the lender party seeks the help of courts of law to retrieve the due payments from the defaulting mortgagee. The mortgaged property is auctioned publicly to generate proceeds that are used to settle the unpaid debts.

10.Once a notice of foreclosure has reached you, there are various ways to settle the matter. Some of these include negotiation measures such as loan modification, short sale and forbearance agreements. Foreclosure defense actions and bankruptcy under Chapter 13 and Chapter 7 can also be undertaken depending upon the situation and eligibility conditions.

DISCLAIMER: The information provided on this website or the web sites linked herein are not a substitute for professional medical or legal advice, diagnosis or treatment. In addition, viewing the content on these websites, requesting additional information, or transmitting information through a contact form does not form an attorney-client relationship with the sponsoring attorney. Any results set forth herein are based upon the facts of that particular case or scientific study and do not represent a promise or guaranty regarding similar outcome or causes. The information on this site is intended for educational purposes only and should never interfere with a patient/site visitor and his or her healthcare provider. This firm is licensed to practice law only in the state of California, but is affiliated with a network of licensed attorneys in other states.

This article is provided as a courtesy of JD Law Group, specialist foreclosure attorneys, 1-888-736-4248.

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