oreclosure is a process by
which a person borrows The process of foreclosures
money to buy and home, varies by state but generally
condo or townhouse, but is unable follows these steps.
to maintain the payments on the
borrowed money. For example, if a 1.Lender sends Notice of Default
person takes a $300,000 loan to (NOD) letter to borrower.
purchase a property, most often
they will repay this money in 2.Lender specifies timeline
monthly installments. If they are during which borrower must get
unable to pay the monthly caught up on payments and late
installments, the lender (usually fees.
a bank), will take steps to
regain ownership interests in the 3.If borrower unable to get
property – a process known as caught up on payments, lender
foreclosure. files documents with relevant
authorities so that the house can
With the boom in home ownership be sold to the highest bidder.
over the past few years, some
people purchased homes that they 4.The house is sold and the
really could not afford. Other lender recoups the loan amount
purchased homes they could afford and late fees from sale proceeds.
at the time, but now their
financial situation has changed 5.If property does not sale, the
to the point where they can no lender becomes the owner of the
longer afford the payments on the property (known as Real Estate
home. In either case, if people Owned by Bank or REO).
get behind on payments, the
lender will likely initiate the So what can a person do if they
foreclosure process. are behind on their payments?
Here are some possibilities: known as a short sale, is only
possible when the buyer and
1.Talk to your lender to see if lender agree to this type of
you can work out alternative arrangement. Borrowers should
payment terms that will help you discuss how this arrangement will
avoid foreclosure. impact their credit rating.
2.Quickly place your home for 5.Borrower files bankruptcy.
sale and hope that it sells Bankruptcy laws are very complex,
quickly. This option is less so borrowers should consult
likely to work in a slow market. qualified professionals to fully
However, if you are able to sell understand the implications of
your home, this will allow you to bankruptcy on a home foreclosure
payoff the lender from the before making any decisions.
proceeds of the home sale
(assuming that the sales price The summary above should give you
and your equity exceeds the loan a general idea about real estate
amount). foreclosures. You should know
that the process of foreclosure
3.If you have sufficient equity, varies by state, and in some
you may be able to refinance the jurisdictions, the borrower has
property and take cash out to get the right of redemption after
caught up on the payments. foreclosure. Be sure to consult
qualified professionals before
4.Borrower voluntarily agrees to making any decisions about buying
return their ownership interest or selling a property in default
in the home to the lender, and or foreclosure.
the lender agrees to forgive any
remaining debt. This option, also
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San Diego Condos
Downtown San Diego Condos
Cardiff By the Sea Condos
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