Foote Title Group – Foreclosure
When you buy a property you may need to borrow funds in order to help you purchase it.
The lender that you borrow from is going to make sure that that loan they are giving you is secure against that property. So if you ever stop making the payment or violate any of the rules of the loan they will want you to repay the loan immediately and the loan documents you sign call for this, it is considered default and when you’re in default the lender can actually start the foreclosure. The process sounds a little scary but remember that they are lending you a lot of money and they want to make sure that they get that money back. So in order to do that they have to make sure that they have something besides just your promise to repay. The foreclosure process allows the lender to sell your property to recuperate what that loan balance is.
The mortgage document that you sign, the Deed of Trust, has a clause in it about Default and about Foreclosure. You are in default of the loan if you are more than 30 days late on your monthly payments. So is you run into a situation where you can’t make your payment on time, I recommend you always contact your mortgage company and tell them what’s going on and sometimes they’ll be willing to work with you. They may agree to help stretch the payment out a little bit until you get back on your feet. Believe me, the process the lender has to go through to foreclosure is very involved and expensive for them and the lender doesn’t want to have to do that if there’s another option. They’d much rather have you in the house making the payments!
Now when they do initiate a foreclosure, they actually have the right to come in and get the house ready for a sale and evict you. They prepare the home and then sell it to recuperate that loan. There’s three different ways that the lender can get that loan money back. You either make the payments for the length of the loan, you sell the property and pay the loan off. They have to foreclose they sell the property and recuperate the loan.
So foreclosure is a process where they actually advertise in the local paper jurisdiction where the property is located. They send you notices that they’re going to do that and then after a period of required legal time of giving those notices they actually have a sale at the courthouse steps in the jurisdiction where the property is located and someone may purchase the property then and there.
This concept is similar to a vehicle loan where the vehicle can be repossessed by the lender and resold to recuperate their loan. That is the secured interest that the lender has and the foreclosure gives them the right to sell it to be able to recuperate that loan.