Foreclosure is a commonly used term in which the owner’s right to property forcefully comes to an end due to his/her incapability of making principal or interest payment. These payments are done in exchange of the money borrowed or loan taken from the lender.
Formally, foreclosure can be defined as the legal process by which an owner’s right to a property is terminated, usually due to default. Typically involves a forced sale of the property at public auction, with the proceeds being applied to the mortgage debt.
The procedure of foreclosure differs from country to country. However, every state provides a limited amount of time to the borrower to repay the required debt in order to redeem his ownership.
There is a certain process that is essential to follow when putting the property into foreclosure. This process is briefly discussed below:
Investigate The Property Owner
Before putting the property into foreclosure its important to analyze the owner and examine his track of payments. If the owner only misses one or two payments and ensures the bank that he will soon pay back the outstanding amount, the bank will not put the property into foreclosure for a certain period of time. However, if the borrower is still not able to repay, bank will initiate the foreclosure proceedings.
The required paperwork is not done by the bank itself. They appoint local attorneys to conduct the official procedures with the court and issue notices publically. These attorneys will once again get in touch with the property owner to ensure whether he can pay off all the payments. If not, official papers will be sent to the owner to inform him that he has been sued and will have to appear in the court. The owner can get more time to payback depending on the decision of the court.
The property will then be auctioned publically. The auction prices are different in different countries. Usually the property is purchased by the bank but in some cases it can be purchased by the third party.
Owners are given a specific time period in which they can reside in their house and arrange the amount they are required to repay or find a new house for themselves.
This process starts after the redemption period is over. In this process measures are taken to take back the property from the owner.