We know that foreclosure is essentially a legal process by a lien holder; typically mortgage companies to obtain court orders. These orders are required to terminate the delinquent equitable of redemption of the borrowers. Lenders usually get security interest from borrower who pledge or mortgage the assets, such as a house. Lenders will repossess the property of borrowers default. Borrowers will be granted by the courts of equity an equitable right of redemption, but only if borrowers manage to repay the debt. Unfortunately, even with the equitable right, it is still not certain that lenders will be able to fully repossess the property.
Legally, there are different types of foreclosure available.
- Judicial foreclosure: Judicial foreclosure process is when lenders file complaints against borrowers. They seek to obtain the decree of sale, which is granted by the court. The court must have the proper jurisdiction in the area where the property is located. This is an important thing to do before a foreclosure proceeding may begin. If courts decide that borrowers are in default, they will be given a specific period of time to pay a delinquent amount plus charges, penalties and other costs. If borrowers are unable to repay within a specific period of time, the property can be sold, so lenders can obtain their money.
- Non-judicial foreclosure: The non-judicial process is used in the foreclosing process when the deed of trust or the mortgage has power of sale clauses. In this case, power of sales clauses are can be found in the mortgage or deed of trust. Borrowers will pre-authorize the property sales, so they loan balance can be paid off when a default occurs. With the power of sales clauses, lenders are given a permission to resell the property, which can be executed by the representative or lender itself. Representatives who perform the reselling process are known as trustee.
Reinstatement is an important factor in the foreclosing process. It is related to the total amount that is past due and that includes attorney and late fees. The amount is intended to bring the mortgage fully updated. Due to previous financial circumstances, it is quite possible that debtors will face a reasonably large past due fees, such as legal expenses, late fees and back payments. The debtor is expected to propose a lump sum payment and if the debtor is able to pay, he is eligible for reinstatement. In this case, debtors may need to consider funds that are disposable.
Many clients have insurance policies, retirement funds and even credit cards that allow them to stay in their house. In order to obtain reinstatement, debtors may borrow money from family and friends. Reinstatement should offer debtors the best way to resolve their mortgage and foreclosure problems. Once the foreclosure can be prevented and resolved, borrowers should be able to enjoy the full security of their house. The above concepts are important for house owners to know if they plan to apply mortgage. Good knowledge will ensure that debtors are able to keep their house.