What Is Foreclosure And How Does The Process Work?

There have been some myths and misunderstandings about foreclosures. Understanding the foreclosure process, what can and can't happen, and what you should expect will help you deal with any possible problems before facing home eviction and imminent foreclosure.

Foreclosure is the legal process in which a property is taken back by the lender to be resold in order to cover the remaining debt. 

One of the most common myths about foreclosures revolves around the time required for this process.  Certain people believe that lenders can initiate a foreclosure process the day after your late mortgage payment, while others think foreclosures cannot happen for many months.  Neither is entirely correct.  

While there are some laws governing foreclosures, the best way to conclude what will take place in your case is to read your loan agreement or promissory note.  Your responsibilities and the rights of the lender to foreclose on your property should be outlined as part of the loan package. 

Another thing to remember regarding foreclosures is that there is a process necessary for foreclosure to happen and those steps should all be taken by the lender.  That signifies that you have time to take several actions of your own to stop the foreclosure process, if you are able to.  If you've just received the first notifications that foreclosure is taking place, you were possibly given several really specific timeframes.  Pay close attention to those.  If you like to take action, don't let those dates slip by. 

While some individuals advise that foreclosure is nothing but an empty threat, there is the really actual possibility that a lender will follow through.  Keep in mind that the lender has money invested in your property.  If you aren't willing or able to repay that money, the lender has a responsibility to the stockholders or business owners to try to recover the money in some other way.  Foreclosure is an alternative and the majority of the lenders will eventually be willing to follow through, even if they give all sorts of additional options. 

If you are already facing foreclosure, you should also remember that you may actually qualify for a new loan - either from the lender processing your foreclosure or from any other lender.  You can borrow money against your property from other lender/s right up to the point of foreclosure, provided that you pay off the current lender with the proceeds of that loan.   

If you're looking at imminent foreclosure, you should look for the advice of an attorney.   

One of the main things to remember is that foreclosures are not written in stone and not all of them are the same.  Getting advice on your precise condition might very well reveal some alternatives that have not been covered here and that are not commonly available.