What happens when a house goes into foreclosure?

by oliver on September 30, 2010

Question:

What happens when a house goes into foreclosure?

Answer:

Foreclosure is a process wherein a lender takes over or repossesses a property securing a defaulted loan. If the borrower or homeowner is not able to pay his mortgage for three consecutive months and cannot make his payments current, the lender files foreclosure on the home.

There are two types of foreclosure namely judicial and non-judicial. In the judicial process, the lender files a lawsuit in order to obtain the approval of the court to sell the property. In a non-judicial foreclosure, however, the lender is allowed to sell the property to recover the defaulted loan as stated in the power of sale clause contained in the deed of trust. The length of the foreclosure process ranges from 27 to 300 days, depending on the state. You may check your local county’s legislation and rules regarding foreclosure in your state to learn the details specific to you.

As much as possible, avoid foreclosure because it will greatly affect your credit rating. Having a low credit score will greatly affect many things such as your employment, purchases, loan applications and a lot more. To avoid or stop foreclosure, the borrower may request for a reinstatement, wherein the borrower pays the defaulted amount owed in addition to the loan fees and interest. This way, the loan can be reinstated and the foreclosure will stop surely.

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