Article by Alis Albanian of Home Mortgage Loans
The term foreclosure is really just about everywhere today. Ranging from the suburbs of well off neighborhoods to the tough streets of the inner city, people everywhere are unable to pay their mortgagesor other loans on their real estate. The definition of a foreclosure is the legal process by which a lien holder acquires a termination of a mortgagor’s right of redemption; or basically takes away their house. This is done by a court order and occurs after the borrower has defaulted on their loans.
If a borrower defaults, the foreclosure process begins. The first step is if the borrower is unable to repay the debt via collateral or other funds, the bank or other lender has the right to seize the house or property and begin the process of selling the house at much less than it is actually worth. The process when applied to a residential real estate mortgage primarily deals with the repossessing of the property; or evicting the current residents from their home when the time comes. This only occurs once the borrower has broken or been unable to pay after warnings and a specific date when minimum payments on the loan must be made.
Sadly, banks lose money on foreclosures too, so it is in their best interest to be prudent as well. If an offer on a mortgage looks too good to be true, don’t take it! The recent housing crisis was caused primarily by bad loans and bad borrowing, and the American economy cannot take another hit in the near future.