With the economy being what it is in the last few years, foreclosures are becoming more and more common . People are losing jobs left and right, and if you have one emergency, you can’t make your mortgage payment.
When you continually do not make your monthly payment, your lender can foreclose on your home. This means that the lender repossesses your home and resells it to try to make back the amount of the loan. You lose your home and the lender often loses money. It is a bad situation for all concerned.
The foreclosure process can be begun after you have missed a single payment but this is rare. Generally, there needs to be three payments missed before it is started. Foreclosures can be done either through judicial sale or through power of sale.
In the case of a judicial sale, the court has to oversee the process. With a power of sale, the mortgage holder can handle the sale alone. Judicial sales are possible in all states while only 29 states have power of sale as an option. If you are in one of those 29 states, this will normally be mentioned in your loan agreement. There will be a clause saying that this is the method that will be used should foreclosure become necessary. All involved parties will be notified that the process is being started beforehand.
When the home is sold for less than a amount of the loan, a deficiency judgment can be obtained which requires you to make up for the loss. This amount can be the difference between the loan amount and the sale price. Or, it can be the difference between the loan and the fair value price.
You may be able to avoid foreclosures. The key is communication. You may be embarrassed to talk to your lender about your finances but it is the best way to try to work something out. Your lender may be willing to be flexible and help you so that you can keep your home and make your payments.
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