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What are the Various Types of Foreclosures?

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By : Sonia Smith    99 or more times read
Today, foreclosures have taken center stage due to the fact that many people would like to know more about the state of the housing industry and the economy as whole. These days, the sub prime mortgage business has dropped, forcing thousands to go into foreclosure. It has boosted the number of homes sold on the market without buyers. There are different types of foreclosures and all of them have their own peculiarities. People are often confused as to make sense of it all. In order to avoid a foreclosure, you should be well-informed and understand the process together with all available options to prevent negative occurrences from happening.

A deed in lieu foreclosure is to prevent actual foreclosure. In this foreclosure type, the borrower agrees to hand over the deed of the property to the lender as full payment of the mortgage against the home. It is quick and prevents a foreclosure record in a personís credit history. Another kind is the judicial foreclosure, which is the most common. The matter will go to court and an officer will sell the home in order to repay the debt. This process is long and often could result to lower sales than what the home could command. Nevertheless, one receives what is left of the proceedings when the debt, costs and legals have been paid.

In a statutory or non-judicial foreclosure, it is the same as a judicial type, but the lender gets to sell the home without the courtís involvement. Nonetheless, this can only be accomplished when the contract of the loan allows it. The process is faster compared to a judicial proceeding but has similar benefits and disadvantages. In the power of sale foreclosure, two elements should be present. One is that the individual mortgage should contain foreclosure by the power of sale terms. Next, the state where the home is located must allow this type of foreclosure. In this kind of foreclosure, the holder of the mortgage sells the home without the involvement of the court. When the home is sold, the money is utilized to pay the mortgage and other liens it might have and the remaining funds go to the borrower.

A strict foreclosure allows the lender to possess the home as soon as there is breach of the mortgage agreement. Nonetheless, this is rare these days and only a few states allow this type of foreclosure. The judge will provide the borrower a certain period to make the loan payments current. In case the borrower cannot make the payments, the lender will take possession of the propertyís title. In many instances, this type of foreclosure only applies if the property value is less than the amount that is owed on the home.

Foreclosure is indeed a serious personal and financial concern. This usually involves a person or family losing their home. It puts a specific mark on the homeowner and makes it difficult to get a loan in the future. It is very important to check out foreclosure options or alternatives or consult a lawyer before entering into a foreclosure proceeding.

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