Foreclosures

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Introduction to Foreclosures

The simple word "foreclosure" can often strike fear into the hearts of private individuals. However it is often not as scary as it first sounds and many actually view it as an opportunity to consolidate their finances. In basic terms a foreclosure is the process which allows the party concerned considerable notice and ample opportunity to repay or refinance their loan.

What is a Foreclosure?

Foreclosure is the legal process by which a secured creditor (usually a bank) repossesses assets to the value of an outstanding debt in which there has been a failure to comply with the conditions made in an agreement between a lender and a borrower. The most common form of agreement is the mortgage and the most common violation of this is a default in the agreed schedule of repayment(s). It is usual for the bank (or other lender) to secure such loans by a lien on the property for which the purchase of was the purpose of the said mortgage.

The process of foreclosure may, at first sight, seem harsh, but it was enacted for the protection of both parties. However, in practice there is often more significant protection for homeowners. For example, in most states it is the law that a lender must only resort to the property for collection of a defaulted home loan. This means that the bank is not permitted to make deductions from the borrower's wages, savings, land, other properties or other assets.

Foreclosure is meant to provide a process by which both the lender and the borrower can work towards the resolving of a delinquent loan balance with a view to fully repay the loan and therefore relieve the homeowner of any further loan obligations.

Bankruptcy and Foreclosure

1898 saw the introduction of the Bankruptcy Act which was the first bankruptcy legislation under US law. The law has been continually updated by many acts and amendments to ensure that it adapts to all commercial and socio-economic demands.

It is important to note that following the filing of a bankruptcy petition, and if proceedings have been initiated, no action for foreclosure can be taken. You may also be interested to learn that if the borrower has filed a bankruptcy petition he can not be evicted from his home. However the lender is given the opportunity to appear before the bankruptcy court to lift the stay and if this is granted, he may then proceed with an eviction.

foreclosure proceedings usually take between four to nine months and it is general practice for lenders only to take action following a three-month default. Many consider the best way to stop home foreclosures is by selling your home as fast as you can. If you are considering this you should only use Licensed Realtors.

However we would strongly advise the seeking of further advice from a well respected professional before you start on a path that is difficult to back track on. We would hate to see somebody suffer by only following the foreclosure advice above as it is only meant as a basic introductory guide to this complex subject.

It is hoped that you take the time to learn more about foreclosures and bankruptcy and we also hope that the articles below help furnish you with the information you require.

About the Author
Myles Johnstone writes exclusively for business & finance related sites about such subjects as commercial mortgages and foreclosures

Source: Business Articles

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