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Submitted by: Brenda Williams
Foreclosure is an ugly word. It is one of the most feared words in the English language, especially during the current tough times with the economy and the housing market. Foreclosure is when a lending party, which can be the federal government, repossesses a house or piece of property to help pay off the mortgage of that piece of property. The repossessed piece of property is auctioned off and the money earned goes towards the mortgage payments that the homeowners weren t able to pay.
Going through the process of foreclosure can be a difficult and harrowing ordeal for homeowners. The job market has hit a rough patch and many people have had their homes repossessed by the federal government and even their banks because the owners haven t been able to pay their mortgage or loans. The current decline of the economy has left many homeowners without their home due to foreclosure and have begun to seek shelter with the Red Cross.
Process of Foreclosure
What happens during a foreclosure? There are quite a few steps to the foreclosure process and they all can be complicated ones. The process can either be carried out in a quick and effective way or can drag on and on and on. There are two ways in which foreclosure can take place.
A Strict Foreclosure is when the holder of the lease, the person doing the lending, repossesses the property in full to repay a debt. The property is then auctioned off, as mentioned earlier, by a public authority figure such as a judge or county sheriff. Any foreclosure that occurs under strict circumstances has to occur in the presence of a judge, sheriff, or other county official. It is more than likely part of the mortgage contract and written into law in certain states.
The other type of foreclosure is Non-Judicial Foreclosure. These types of foreclosures occur without the aid or supervision of any judge, sheriff, or other county official. The requirements for this foreclosure process are usually established by each individual state and their laws and statutes. The owner of a home that is going to be put up for auction will receive a letter of default. The letter of default advises the homeowner that if the outstanding balances on their loan or mortgage aren t paid by a certain date then their home will be placed on the auction block. Once the auction takes place, the money earned goes towards paying off the mortgage and then to any services provided by lending corporations and banks.
Alternatives to Foreclosure
As daunting as foreclosure can be, there are alternatives to just handing over a piece of property as collateral. Many homeowners refinance their home, use alternate financing, declare bankruptcy or even make new arrangements with their lending partner to restructure their current contract for a period of time.
Refinancing one s home seems to be the most popular way to protect from foreclosure. To refinance means to replace the existing agreement with a lending partner on how to repay the debt with a new way to repay the debt.
As mentioned earlier, what happens in a foreclosure can be a daunting and frightening thing, but it can be completed in easy steps if the state allows for a strict foreclosure process. Then again, what happens in foreclosure can be avoided altogether by using some of the options listed above.
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