What Is Foreclosure?
What Do These Other Foreclosure Terms Mean?
So, let's start at the beginning. When a person buys real estate such as a house, they usually need to borrow money from a bank or other lending company. They agree to pay back this money - plus interest - over a period of years.
Since "life happens" and things like accidents, illness and job losses occur, sometimes the person who borrowed the money finds it impossible to make those regular payments each month.
When this happens, the lender is not satisfied because he wants to have the money repaid. In most cases, the lender moves in to take control of the property and resell it to pay the debt. This process is called foreclosure. Unfortunately, the borrower loses the property and must relocate.
Foreclosure does not happen immediately after the first payment is missed. In most cases there is a grace period of two or three months. If the payments are not made up by this time, and the borrower has not made arrangements with the lender, then the borrower or mortagor will receive a notice of foreclosure.
What is Foreclosure - Power Of Sale
Very often a power of sale clause is written into the mortgage document. What this means is the lender has the right to sell the property without having to go through the court system. This power of sale clause makes it easier and quicker for the lender to get his money back. If that clause is not in the mortgage agreement, then he must go through the courts before he can sell the house.
What is Foreclosure - Judicial Foreclosure
Judicial foreclosure starts with the lender filing a notice of Lis Pendens with the Court. After a court hearing, usually in a state or local court, the sheriff may supervise the sale of the property by auction or it may be sold through a real estate agent on the open market.
Judicial foreclosure is a requirement in many states. The court sees to it that the lender gets his money first, then other people who are owed money. E.g. utilities and realty taxes may need to be paid. If there is any money left over after all other lien holders have been paid, then it goes to the borrower.
The only legal mechanism that would stop foreclosure is filing bankruptcy but this only puts the process on hold while the creditor and debtor come to an agreement on the settlement of the debt.
What Is Foreclosure: Terms Used In The Foreclosure Process
Lis Pendens: is Latin for "suit pending.". The purpose of the notice is to show anyone researching the property that there is a pending lawsuit that affects the property in question.
A property is considered to be in "pre foreclosure" from the day a Lis Pendens is filed until the day the property is sold. The time frame between these two dates can vary from state to state. Some states sell properties within 90 days from the first notice of default, while others can take as long as 12 months.
Cloud On Title: A cloud on title is generally considered synonymous with a title defect. When the title to a real property (real estate) includes something unusual or irregular, that would give a person cause to reassess before accepting title. A cloud on title can include:
If you own real estate and are over financed, a short sale may be an option.
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If the American people ever allow private banks to control the issue of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all property until their children will wake up homeless on the continent their fathers conquered.
~ Thomas Jefferson in 1802 in a letter to then Secretary of the Treasury,
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