Foreclosure originally begins with a default in payment made by the lender. It refers to a legal procedure allowing a lender to claim back the possession on the defaulted property. If payments have been missed successively up to six months then the lender lodges a Notice of Default.
The lender notifies the borrower up to 5 days to start a period of reinstatement. The state will determine a repayment procedure and repayment sum for the borrower to end the foreclosure process. This is known as the pre-foreclosure period.
If the loan on default is not put right, a state period for the foreclosure is firmed up. A Notice of Sale will be received by the borrower. This Notice will also be transmitted to the government`s office concerned where the property is situated. It will also be published in the newspaper. The property is awarded during this point to the highest bidder. A corresponding cash deposit will have to be made upfront. The bidder will then obtain the trustee’s deed. This allows the borrower to pay the loan on default and ascertain that the credit report is free from loan default statement.
Sometimes the mortgage lender himself will take possession. This may be through an agreement with the borrower in the pre-foreclosure period. In general the lender will choose to sell the property and recover the loan. The lender will offer the necessary maintenance the property may demand.
The foreclosing lender schedules the auction and an opening bid. This is equivalent to the borrower’s loan balance to include outstanding, accrued interest, attorney fees and any miscellaneous fees involved. If the highest bid is less than the opening bid, the legal officer will buy the property on behalf of the lender. In the situation that the opening bid is not duly completed, the property is labeled as real Estate Owned.
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