Foreclosure: An Overview
When you take out a mortgage, the lender (usually a bank) retains a legal right to the property. If you are unable to make the required payments on the loan, the lender uses this legal right to take back the property and sell it to pay off the debt. This is the foreclosure process.
Foreclosure is generally governed by state laws, which include protections for both lenders and homeowners against fraud and unfair practices. The process is usually done one of two ways: judicial foreclosure or foreclosure by power of sale.
Types of Foreclosure
Most foreclosures go through the “judicial” process, meaning the sale of the property is supervised by a judge. In some states, judicial foreclosure is required.
Foreclosure by power of sale is faster because it doesn’t involve the courts. There will usually be language in the loan agreement if this is the preferred option. Twenty-nine states allow this type of foreclosure.
What Is An Acceleration Clause?
Acceleration clauses appear in most mortgage agreements today. They give the lender the right to demand the entire debt due if the borrower fails to make their monthly payments.
For example: If someone takes out a $50,000 mortgage, pays off $10,000, then stops paying, the bank can use the acceleration clause to declare that the remaining $40,000 is due then and there.
Avoiding Foreclosure
Many mortgage lenders are willing to work with you to avoid foreclosure. The most important thing is to not ignore the problem. The further behind on payments you get, the harder it is to avoid foreclosure. Contact your lender or an attorney sooner rather than later to help get yourself back on track.
Additional Foreclosure Articles
- What Are a Homeowner’s Rights During Foreclosure?
- How Do Creditors Get Paid When Foreclosing on a House to Satisfy Unpaid Debts?
- How To Avoid Foreclosure
- The Mortgage Forgiveness Debt Relief Act of 2007
- Can I Use a Loan Modification Program in Order to Save my Home from Foreclosure?
- Renters Now Protected in Foreclosures
- What is the Hope for Homeowner’s Act?
- What Is a money judgment?
- Foreclosure & Strategic Default (Walking Away)
- What is Strict Foreclosure?
- What are Credit Counseling Agencies?
- Different Types of Foreclosure
- How Can a Creditor Repossess Property?
- The Foreclosure Timeline
- Defenses to Repossession
- Understanding the Foreclosure Process
- A Plain Language Explanation of Your Options for Avoiding Foreclosure
- Alternatives to Foreclosure
- What to do About Your Mortgage When You’re Facing Money Problems
- Bankruptcy or Foreclosure?
- 10 Tips for Avoiding Foreclosure
- Foreclosure Laws in Hawaii
State Foreclosure Articles
- Alabama
- Alaska
- Arizona
- Arkansas
- California
- Colorado
- Connecticut
- Delaware
- District of Columbia
- Florida
- Georgia
- Hawaii
- Idaho
- Illinois
- Indiana
- Iowa
- Kansas
- Kentucky
- Louisiana
- Maine
- Maryland
- Massachusetts
- Michigan
- Minnesota
- Mississippi
- Missouri
- Montana
- Nebraska
- Nevada
- New Hampshire
- New Jersey
- New Mexico
- New York
- North Carolina
- North Dakota
- Ohio
- Oklahoma
- Oregon
- Pennsylvania
- Rhode Island
- South Carolina
- South Dakota
- Tennessee
- Texas
- Utah
- Vermont
- Virginia
- Washington
- West Virginia
- Wisconsin
- Wyoming