Foreclosure ensues when the owner of the home or property is in default of making regular repayments of a loan. The borrower would not only lose the home or property in question as he/she is in breach of the mortgage agreement, but also credit-worthiness.
The loss occurs as the lender, who would be a bank or other creditor, would repossess the home or property by due process. The process could be judicial when it is called judicial foreclosure or direct take-over by the mortgagee or his agent.
Both processes involve auction, by which the lender gets his full settlement of the loan given to the original borrower. In the judicial foreclosure process, the sheriff notifies the auction as applied for by the lender. The auction takes place in the court hall, which is a matter of formality.
When the bank repossesses the property, it would be put up for sale to settle the debt. If there is any extra amount available, it would go back to the original owner.
In the direct foreclosure, the lender or his counselor gives notice to the mortgager and subsequently auctions the property. Sometimes, the owner of the home or property has to be evicted.
The buyer of the property in question would have to get a decree for possession.
The priority of the borrower, who fails to pay off the installments regularly and gets notice of foreclosure, should be to somehow stop foreclosure by banks or secured creditors with whom he/she had a mortgage or deed of trust.
In the event of foreclosure, it would be difficult for the borrower to get further loans. Numerous firms, lawyers, and counselors are available to offer assistance to the defaulter to suggest ways to ward off foreclosure.
Sometimes, the lender would be prepared to amend the mortgage deed, enabling the borrower to continue to possess the property, with changed terms of repayment.
Foreclosure is the ultimate weapon in the hands of the lender, which takes away the property and reputation of the lender.
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