Real Estate Foreclosures-shortsaleonlyus.com

Foreclosure, a term often used in the legal proceedings of home auction, is the final step in which a mortgagee, or lender, can reclaim his money if the borrower defaults. Whenever a mortgagor, or borrower, fails to repay to lender, the lender can carry out the foreclosure procedures with the supervision of the court. Real estate foreclosure procedure starts with a Notice of Default and includes various procedures that vary in different states. There are also a plenty of options for a borrower to avoid foreclosure including alternate financing, refinancing and temporary arrangements. Real estate foreclosures are of different types including judicial foreclosure, foreclosure by power of sale, strict foreclosure and other foreclosures.

Foreclosure procedures

Foreclosure process carried out by banks and other lenders involves certain procedures like claiming the property, which was mortgaged, if the lender defaults and selling it on public auction to keep the proceeds. Other than selling through auction, banks can also own the property if the property does not sell to someone outside the bank and hence the property becomes a real estate owned property, or REO. Following the issuance of the Notice of Default, the borrower gets a chance to repay his loan through the courts of equity. During this grace period, the lender cannot apply any other foreclosure procedures like public auction, and REOs etc.

During the grace period, or pre-foreclosure period, the borrowers can sell their property to some third party to repay their loan. This allows the third party to take over the property by repaying the remaining installments that was left by the previous owner. If the mortgager did not repay his loan in the pre-closure period, then the property goes into the hands of the lender. The lender can then sell the property through public auction. Sometimes the bidders at a public auction were not allowed to take a look at the interior parts of the house. However, buying in a public auction would allow the bidder to avoid the uncertainty in dealing with the property owner.

Housing Bubble

The United States was hit by the housing crisis recently due to the economic slowdown. The housing prices, which climbed in 2005, declined subsequently in 2006 resulting in a crisis called ‘housing bubble’. Many mortgagers became incapable of repaying their loans due to many factors including lay off, debt, job transfer and other health conditions. As a result, many mortgagers were forced to receive foreclosures. This resulted in the mortgage and credit crisis. Many banking firms that lent credit to mortgagers suffered due to decreasing housing prices.

Types of Foreclosures

Real estate foreclosures are of different types. Judicial foreclosure is a way in which the mortgaged property is sold under the supervision of a court. In a judicial foreclosure, the proceeds were first given to the mortgage, then to the mortgagee and finally to the borrower, if any proceeds are left. Foreclosure by power of sale allows the mortgagee to sell the property without the supervision of a court. Strict foreclosure is a procedure that obliges the mortgagor to pay for the mortgage following a lawsuit by the mortgagee. If the borrower fails to repay the mortgage amount, the lender gains the full rights to own or sell the property.