What is a Foreclosure?
Foreclosure is a lawsuit that has been filed by a mortgage company, or lien holder that seeks to take possession of the owner’s property in order to satisfy a debt. The lien holder or bank can take possession or have the property sold in order to pay off the balance owed. With a foreclosure, the owner looses all rights to the property. Foreclosure is a court proceeding, and must be followed carefully in order to protect the individual’s rights.
An example of what is a foreclosure, is when a homeowner falls behind on their mortgage payments, the lender can bring a foreclosure action against the homeowner. Or if the homeowner takes out a loan with the house as collateral, and they default on the loan payments, the loan agency can take possession of the house for payment of the balance of the loan.
If the borrower fails to stop the foreclosure process, the lender will hold a public sale of the property. First the lender will need to publish an ad in the local paper for three weeks announcing the sale. Usually the sale is scheduled for thirty to forty-five days after the first ad is run in the paper. The notice must include the location of the property, the time and date of the sale, and the property’s description.
Usually the sale takes place at a foreclosure attorney’s office, or may be done at the property (if it is a house or en entire estate). The sale may be postponed, but only for seven days after the original sale date, and must be announced at the original date the sale was scheduled.
If it is a house that is being sold, it will usually be auctioned off. And will be sold to the highest bidder. Sometimes the bidders will be asked to bring a certain amount to put “down” on the property before they are allowed into the auction, and will need to pay the balance within thirty days of purchase.
After payment has been received for the property, the lender will transfer the ownership of said property to the winning bidder, and the lender will pay off the mortgage balance. If there is money left over after paying off the mortgage, the rest of the money will go to other liens that are owed, as the court will instruct. If the sale price is less than what is owed, the lender will proceed with other means in settling the rest of the debt.
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