This article is an overview of foreclosure by DC Fawcett. Foreclosure is the legal process of losing your home when you stop making mortgage payments. Your home loan owner possesses legal rights to sell your property when you don’t make the monthly payments correctly.
What does a mortgage transaction involve?
A mortgage transaction involves mortgage and a promissory note. But in the first place, what is the need for a mortgage? Suppose you want to buy a home, you may not have down cash to pay for the home in full. In that case you will have to finance for the remaining amount using a loan. This is the need for a mortgage transaction. The lender takes title of your property which is valid until you repay the loan.
A promissory note is a document which states that you are in a debt and you are responsible for repaying your debt and take care of short scale scams. Promissory notes can be transferred when the loan changes hands. This is done with an endorsement. A mortgage is a legal document that states that a piece of your real property is held as security. When a mortgage is transferred, it is recorded in the land records and an assignment document is created stating the transfer.
Who are the people involved in a foreclosure?
People who take part in mortgage transactions and foreclosures are
You are the borrower if you take money from someone and pledge your property as security
You are the lender if you lend money to the borrower.
Others are investors and loan servicers. The former buys money from the lenders and the latter manages the borrower’s loan account.
Before starting the foreclosure, the lender will send you a note saying that your home will be foreclosed if you don’t make the payments due. This should be done 30 days prior to starting your foreclosure. Procedures of foreclosure are state specific. In some states the foreclosure is supervised by the court while in others, the lender employs a state-specific process to make foreclosure. This is not supervised by the court. In some states, help is given to the house owner to escape from foreclosure. Now you will look into 2 types of foreclosures in detail.
When the foreclosure is monitored by the court, it is called a judicial foreclosure. In this foreclosure, your lender will file a law suite 30 days prior to the sale. If you don’t respond positively, your foreclosure proceedings start. The court decides a date of sale. The foreclosing party must notify this date of sale in public. An auction is held on the date of sale and the highest bidder gets your home.
Non judicial foreclosures
In these foreclosures, the foreclosing party sends you some notices. Each notice has a specific format. They have to specify the amount due, the steps necessary to restore your loan, the person with whom you can discuss about the notice and the date of sale.
DC Fawcett says that Foreclosures can be highly depressing. Your home passes into another person’s hands which can be extremely painful.