Definition of Foreclosure on Default of Payment of Property Loans - Foreclosure is a legal term predominantly on the minds of many American homeowners. The average American family works hard to afford a home in which their family can live comfortably. Most families do not have the cash up front to pay for their dream house...
Total Articles:
118540 Total Authors:
6241 Total Downloads:
1217285
Newest Member Jody Roberson
Definition of Foreclosure on Default of Payment of Property Loans
Foreclosure is a legal term predominantly on the minds of many American homeowners. The average American family works hard to afford a home in which their family can live comfortably. Most families do not have the cash up front to pay for their dream house in full. They will seek a loan from a financial lending institution such as a bank or a mortgage company to purchase this home.
To secure the loan, these financial lending institutions must be certain that they will get back their money back. Since a good paying job does not guarantee that a loan of this magnitude will be paid back, they require what is known as collateral, an asset they may seize in lieu of payments if the loan is in default ( no longer being paid back ).
Normally the home that is being purchased with the loan is put up as collateral and if the mortgagor ( person seeking the loan ) does not pay back the loan to the mortgagee ( money lender, borrower ), the house goes into foreclosure. The money lending institution may obtain a court order to proceed with the foreclosure and repossess or seize the house in lieu of repayment of the loan.
In some instances the financial lending institution may attempt foreclosure on a home or other property, but if the borrower repays the loan, a court of equity may rule in favor of the borrower who at that point will be able to keep the home or property in question.
The contract between the financial lending company and the borrower is called a mortgage or deed of trust. When a contract has been entered, effectively the lending company has agreed to give the borrower a certain sum of money in which to purchase the said property. The borrower agrees to pay this money back ( signs a promissory note ). The contract will also stipulate that a lien will be placed on the property meaning that the financial lending company has a right to seize the property ( repossess it ) if the loan is not repaid in the time frame that is stipulated and according to the conditions set out in the contract.
The process of foreclosure is used in any contract whereby real estate, homes, farms, land, and other immovable property has been obtained through a mortgage, and the mortgage holder has defaulted on the payments.
Judicial Foreclosure is available in all the American states. When the borrower defaults on the loan, the property is sold. The proceeds from the sale of the property first goes to repay the regulate on the existing loan, then to any other lien holders, and finally to the borrower if any proceeds are left over. All transactions are done legally through the court system.
Foreclosure by power of sale is sometimes added as a clause in the mortgage contract that defines the foreclosure procedure without court intervention. This procedure follows the same order as the Judicial Foreclosure irregardless faster since the courts are not involved.
Are you seeing the same old info on every website you visit? Try for fresh info. Sign up for our FREE report "Insider Secrets That Can Stop Foreclosure". Go to right now to find what you've been searching for.
Note: by reading this article you agree to our terms and conditions use for informational purposes only
![[Valid RSS feed]](/images/icon_Rss.png "XML Feed For RSS"){kind=icon}
Subscribe to RSS feed for this category articles
Click here to copy and publish this article
Print This Article
Add To Favorites