Types Of Home Foreclosure (Types of Home Foreclosure)
Posted on August 13, 2009
Filed Under home foreclosure investing |
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Types Of Home Foreclosure
by Doc Schmyz
Your mortgage is the most important bill we have to pay
every month. Besides credit card bills, we also have to make
sure we don’t miss our other monthly payments. When we fail
to pay the mortgage; foreclosure happens and we lose our
home.
Foreclosure…what exactly is it?
When you miss a number of payments; your mortgage lender has
the right to foreclose on the home by selling or
repossessing the property.
The usual number of payments that borrowers miss before
their house goes into foreclosure is 3 months. In other
cases the lender may accelerate the payment to give the
borrower a chance to settle his or her debt. They will
require the borrower to pay all the missed payments at once.
There are different types of foreclosure that lenders can
do.
Judicial foreclosure
In this case the lender sues the homeowner. If the owner of
the house does not respond to the lawsuit, the lender wins.
The property is then put up for auction. Participants will
have to compete with the mortgage lenders bid. If no one out
bids the mortgage lender he repossesses the house.
Otherwise, the deed will go to the highest bidder. This is
normally referred to as a “courthouse auction”.
Foreclosure by the power of sale
The deed of the house goes directly back to the mortgage
lender. The house is then sold by a real estate agent.
Proceeds earned from the sale will be used for paying off
the amount owed by the former homeowner. In the event
proceeds are not enough to cover the mortgage amount the
lender will issue a deficiency judgment.
The deficiency judgment is the amount left after the
proceeds from the sale cover the mortgage owed by the
previous homeowner. The previous homeowner is liable for it.
Strict foreclosure
The court orders the borrower to pay the mortgage in a
certain period of time. If the borrower fails the property
will go directly back to the mortgage lender without any
obligation to sell it. In this case (as silly as it sounds)
normally the tenants are evicted from the home via the local
sheriff, and then the house sits empty until such time as
the lender can sell it. (In the event it is a rental
property,and the tenants are NOT the owners,they are still
forced out in most cases.)
Judicial and foreclosure by power of sale are the most
commonly used methods in United States. Other states use
other methods. Strict foreclosure was originally used but is
now only utilized by a few states such as Vermont and New
Hampshire.
Doc Schmyz has invested all over the US. His free website
shares http://www.investor411.org Real estate
investing information for all over the US. Find http://www.investor411.org/states Real estate investing information by state
http://www.TheMarketingSchool.com
Types Of Home Foreclosure
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