by K Lochery

Created on: December 20, 2008

Steps In A Foreclosure

If you are having trouble paying off a mortgage on your home or a bank loan that has been secured against your home, then you are in danger of losing your property to foreclosure. After a period of non-payment, the mortgage lender or the bank that has lent you the money against your home has the right to take you to court and order a foreclosure. There are steps you can take to avoid this, but once the ball is in motion, you are only a few short steps away from losing your home altogether.

One of the first steps in a foreclosure is obviously, non-payment of your mortgage or bank loan. It is generally in your contract how many non-payments there will be before you face such an action, but it is obviously not going to be very many. You should avoid not paying your loan/mortgage as much as is possible, but if there is no way that you can prevent it, then you need to start looking at possible action. At this stage, it might be wise to go to your lender and see if there is a way you can work out the debt. Another option you have is by refinancing the property, and therefore starting off your loan over again, as it were. As a last resort, you could always think about selling your property. Selling by yourself will work out much better for your credit rating than facing foreclosure which will literally destroy the credit report you have overnight!

The second step in the foreclosure is that the type of foreclosure will have to be decided. It will be one of two possible options - Strict Foreclosure or Foreclosure By Sale. The first, strict foreclosure, is where a judge will set out how many "law days" each defendant, or person in the foreclosure situation, (people who the house is named under) will have. Once these days have passed, the owners of the property will lose all rights. It will no longer belong to them, and will belong to the lender. If you can come up with the money to pay off the debt, or refinance the property before the law days are up, then the property will remain yours, if not, say good bye to your home!

If you are faced with a Foreclosure by sale, the second option, then the Judge involved in the case will set a date that the house will be put up for sale. Again, if you can come up with the money or refinance before that date, the property will still be owned by you. You could also try to sell the property yourself before this date. If you can't do any of the mentioned things, then the house will be put up for sale. If any money is left over from the auction of the property, after paying auction fees, debt's etc, then it will be yours, but this is quite rare.

So there you have it, the steps in a foreclosure. There aren't that many and once the ball is in motion, it can be hard to stop it. It is wise to keep up the repayments of your loan or mortgage, and if this is not possible, speak to the lender before the situation gets any worse! Otherwise, you could find yourself losing your home.

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