What Does It Mean to Go into Foreclosure?

Foreclosure is a legal process that has come to be used as a way to force homeowners to move, so they can vacate their current houses. This can be a distressing experience for many homeowners, especially if they are not prepared to relocate. Foreclosure happens when there are no suitable properties to buy that are affordable, and the bank has foreclosed the home. It can be considered a legal process used to put a person in control of a home and collect unpaid real estate taxes and back mortgage payments. There are many ways that a person can get into foreclosure and the lenders may be concerned that the home is worth less than they have loaned on the property.

What happens to a property that is for a foreclosure?

The term “foreclosure” is used by banks and lenders to describe their process of evicting the mortgage holder (or the servicer) of a defaulted mortgage loan. Once the mortgage holder is evicted (sometimes called a “deficiency judgment”), the bank or lender can sell the property at a public auction, though it is more common for the bank or lender to simply shovel the mortgage and related paperwork into a garbage truck and wait for the property to be sold at a public auction.

Stages of Foreclosure

Default Payment

The default payment for a mortgage is known as “interest only” or “amortization”, and it means you are still making payments because you are still paying for the house, but only the interest portion of the loan. You are still responsible for everything from the very beginning, but the lender cannot take any money from your profits. In the beginning, you pay a small amount of interest, usually around 2% to 5% per year. After a while, you have no interest on your loan at all, which means you are still paying the loan itself. You need to make these payments forever, which is why you call it “foreclosure.”

Default Notice

The process of foreclosure is a complicated one. It begins with a default notice, which is a letter that is sent to the mortgage holder of the property, informing them that the mortgage is in default and giving them 30 days to contact the bank and begin the foreclosure process. If this doesn’t go through, the bank can go to court and begin the process of foreclosing.

Trustee’s Sale Notice

One of the first steps in this process is filing a Notice of Trustee Sale. This is a document that is filed in the local court in the county where the property is located,

listing the property’s owner, the amount owed, and a deadline for the defaulting party to either cure the default or have the property sold at the trustee’s discretion.

Sale of Trustees

One significant event in the life of a property is the sale of the trustees for that asset. The trustees are in charge of looking after the property, making a profit when selling it to investors like https://webuyhousesinatlanta.com/woodstock/, and peeking after any money that is left over after the sale of the property (also known as “banking”). In this instance, a 10% commission on the sale proceeds will go to the trustees.

Real Estate Owned (REO)

When a bank forecloses on a house, it typically takes about a month before the bank will make an attempt to sell the home. This gives the bank time to do a few things. They will contact the owner of the house and ask them to pay a certain amount of money to avoid foreclosure. If they refuse, they will have to pay back the amount of money that they have already paid with penalties and interest on top of it. Once this happens, they will start the foreclosure process, which will entail contacting the sheriff to have the house seized.

Eviction

It’s not uncommon for homeowners to have to move out of their homes when they fall behind on their mortgage payments. However, when the home is lost to foreclosure, the process can be more complicated than just packing up the family and leaving the house.

When you go into foreclosure, you lose your home, and it’s not long before life as you know does not remain the same. Once you lose the home, it’s hard to get it back, but there are things you can do to improve your chances of being able to do so.