What is a foreclosure?

Why did the sheriff put my stuff on the street? That question is hard to answer if you don't understand your state foreclosure proceeding. Therefore, lets look at what foreclosure is and why you and your family could be on the street. Also once you understand the why then we will look at what can be done to prevent it. However, lets start with the basic question what is a foreclosure?

Foreclosure is the big remedy that a mortgage holder has against the debtor property owners. Foreclosure is then a legal means by which the bank can acquire your property by that the real estate conveyed in the mortgage be sold and the sale proceeds used to pay the debt.

Grounds for foreclosure:
A holder of a mortgage does not have rights to foreclosure or exercise other remedies unless the homeowner is in default under the mortgage. In addition to failure to pay debt, most mortgage note contains other provision, the violation of which result in default. These provision include failure to pay property taxes,failure to pay the home owners insurance and keep the property in good condition. Breach of any of the mortgages covenant gives the holder of the mortgage the right to foreclose or exercise remedies.

Types of Foreclosures

Foreclosures take place either judicially or through a power of sale contained in the mortgage. Based on which state your property is located will determine which type of foreclosure will the bank use. However, if your state use mortgages then look the lender to follow the judicial sale procedure. On the other hand states that use deeds or security deeds to secure a debt will use the power of sale foreclosure.

Now that we got the generally idea regarding the different ways a bank can foreclose and take place, lets look at both procedure a little closer and what could take place. I must warn you upfront I am not an attorney and nothing should be taken as substitute for contacting an attorney. If you have legal questions regarding your foreclosure procedure please contact one today. Now that I have got that out lets move on.

A judicial foreclosure is a lawsuit. The mortgage holder will file a complaint against alleging there is a debt owed: the debt is in default :and the debt is secured by real property given in a mortgage. The creditor will then ask the court to grant relief by ordering the real property sold to pay the debt. Now what? Well the you the homeowner is given an opportunity to answer and a hearing on the merit is held on the merits to decided if the foreclosure should occur. So many homeowners is unable to put together a legal response to this challenge and just move out to avoid embarrassment.

Source: Daniel f. Hinkel