The definition of a foreclosure in relation to a home mortgage is when a home purchaser defaults on the promise to pay the lender a set amount of money at an agreed upon time and in a timely manner to decrease the debt
of the borrowed sum from the lender. When a home owner/purchaser fails to complete the contract as agreed upon, a legal process is set in motion to terminate the contract between the lender and the homeowner. Once the paperwork is initiated by the lender
and the mortgage is in default, this is the end of the obligation and commitment by the two parties to cooperate in the mortgage loan. If there is no resolution by the buyer of the home mortgage loan, the right of that person to have a say in what
transpires regarding the home is out of that personís control. Once the house is foreclosed on, the rights are terminated for the occupant of the home. The property owner then forfeits his interest in the property and is forced to walk away from the home
Once this happens and the home is foreclosed, the options for the mortgagee are to either look for someone to pick up the loan or to redefine the contract on the house with a new party. The lender can choose to sell the home at auction by which the
lender usually is just trying to get out of the house what was put into it by the company. These options depend on what type of foreclosure they are dealing with. There are basically two types of foreclosures.
The type of foreclosure that the property is going into determines what options the mortgagee has to deal with the property so as to retrieve the borrowed amount of the loan default. A foreclosure that is brought against a homeowner that does not have a
clause allowing the lender power of sale must be resolved by a court order. The judicial system must grant the loan lender the power to recover any debt remaining on the loan that the homeowner has not paid. Basically, in a judicial foreclosure, the sale
of the property is court-supervised and there is legal recourse for the lien holder of the property and a record to show proof of dispensation of the monetary gain from the sale of the property. The mortgage is the first to be paid off. The lender has
priority to be satisfied for the amount of money the borrower defaulted on. Any monies left after the mortgage loan is satisfied will be paid to lien holders such as construction liens, etc. Finally, if there is anything left after all debts have been
satisfied, the homeowner who was in default can be paid. The first course of action taken with this type of foreclosure is that the parties who will be involved in the court action must be notified prior to any execution of the court ordered sale of the
property. This sort of foreclosure proceeding is not dissimilar to any court action requiring a judicial judgment.
It is a usual practice that in todayís mortgage loans there is included an acceleration clause that protects the mortgagee from a long drawn out loss of profit. This clause does basically what it is called in that it speeds up the time that lost
payments can be accruing and stops wasted time waiting for the defaulting party to make good on their debt. What transpires in the acceleration clause is that when the payment on the loan is not made, the clause kicks in and full payment of the loaned
amount becomes due and payable. Once the full amount due on the new terms that were caused by default and according to the acceleration clause are not received the foreclosure can begin being processed. This cuts out a great deal of wasted time and money.
The same conditions will still exist as stated above if this is a judicial foreclosure.
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