7 Facts You Should Know About Foreclosure

When a home goes into foreclosure, this either means that the bank has seized the home or the owner decided to voluntarily deed the house to the bank. However, it is very rarely the owner’s decision to actually put the house into foreclosure. It typically happens because of circumstances that are beyond the owner’s control, most of which include an inability to keep making payments on the house. In many cases, it is because they ended up getting laid off or fired from their jobs, had mounting medical expenses that they could not handle, were going through a divorce that complicated their finances and rendered them unable to make house payments when they needed to, et cetera. In the situation where the owner has stopped making payments on the house, the lender, which is usually a bank, will force the selling of the house that is collateral for the loan. They do this in an attempt to recover the balance of the loan. In layman’s terms, this ends up in the house being seized and sold to another person that the bank feels will be able to make payments on the property. This can be a very difficult process for the person who owns the house, as it often puts them in a very undesirable situation. However, there are certain ways to deal with this very situation once the bank has put the home into foreclosure, and it is very helpful to know more about the process so that you can know more about what you can do to handle the situation if it ever ends up happening to you.

1.Foreclosure Is a Process

The formal process of foreclosure involves the lender or other lienholder obtaining a termination of the equitable right of redemption of the borrower. This will happen either by court order or by operation of law. Typically, what will happen is that the lender will get a security interest from the borrower when the original agreement is made upon purchasing the house. If the borrower ends up defaulting on the loan, the lender will try to repossess the property. However, if the borrower is able to repay the debt, courts of equity will potentially grant the borrower the equitable right of redemption. While the borrower has the equitable right of redemption, the lender will not necessarily be able to repossess the property. The process of foreclosure involves the lender seeking to immediately terminate this right and take back both legal and equitable title to the house in fee simple. It is also possible for other lienholders to foreclose on the owner’s right of redemption for other types of debts, such as overdue homeowners’ dues, overdue taxes, et cetera. However, most commonly, the foreclosure process involves the bank or other creditor either selling or repossessing the house after the owner has failed to comply with the agreement. At the conclusion of the process, the lender will be able to sell the property and keep the profits to pay off the mortgage as well as any legal costs. If selling the house does not give the lender enough money to pay off the existing balance of principal and fees, the lender will be able to file a claim for a deficiency judgment. If you need legal assistance you can also find additional legal aid here and you can search for a lawyer here.