Foreclosure is a legal process that occurs when the borrower/homeowner fails to make the repayment of the loan. It happens usually when the loan is taken on mortgage and the lender files a public default notice in a legal way. Many people in the U.S. think that if they get a foreclosure notice, the lenders will get their properties back. But that’s not true at all. In fact, it’s just an initial process by the lender which may take weeks or even months to complete. If you do not make loan payment in 30 days from your due date, the bank or lender may send you such a legal notice. Since some loan modification companies are there in the market, you can take help from them.
There are 3 types of foreclosure in the U.S.
(1) Judicial foreclosure where the lender goes through the court system.
(2) Non judicial foreclosure where the lender can sell the borrower’s property without the court system.
(3) Strict foreclosure where the lender takes help straightly from the court to give title to the borrower’s home.
The foreclosure process can end up in the following ways:
- Paying off
In case the homeowner/borrower returns the due loan amount by paying off within a grace period given by state law, the foreclosure process may stop. This grace period is also known as pre-foreclosure period.
- Third party sell
If the homeowner/borrower sells their property to any third party and make payments to the bank/lender during the pre-foreclosure period, they won’t take any actions and your credit history will not be affected.
If the third party buys the property in a public auction at the end of the pre-foreclosure period.
- Re-sell by the bank/lender
If the bank/lender takes back the property and re-sell it again in an open market. In such a case, you should take help from a loan modification consultant.