A foreclosure process is initiated when you have defaulted on your loan. The lender has a right to proceed to reclaim his real property. Should you not rectify the loan or come up with some modification of terms, then you will lose your home or land. Whether you have further legal responsibilities in addition to tax consequences will depend on the state you reside in.
What is a foreclosure?
A bank foreclosure happens when you have defaulted on your loan. You are given 60 days to rectify the problem with the lender and if you do not, a notice of default will be posted on your door or mailed according to your state's requirements.
If you do not do anything to bring the loan current or make an agreement with modification of terms, then in 90 days, a full foreclosure will happen. Home foreclosures are on the rise and although bank repossession is necessary, it is never a happy time. Emotional avoidance of the problem will not make it go away.
Foreclosure information
You can obtain foreclosure information in a number of ways. Firstly, you can contact your bank and inquire about their policy and procedures or you can go online and read up on the procedures in your state.
HUD offers many suggestions as to what you should do next and will offer guidance as to whether you qualify for help with the government's "HOPE" program. In order to qualify, you must have missed two consecutive payments and be employed.
Home foreclosure auctions
If you have not rectified your mortgage by the date of the auction, the lender will offer your home for sale to bidders.
Secondly, mortgage lenders will have a right to show up on the steps also and bid on the home. If a private individual shows up, then he must pay of the second lien on the home, in addition to bid on the property. It is advisable to consult an attorney prior to bidding on the steps of the courthouse.
Buying a foreclosed home
If you have lost your home to foreclosure and you feel hopeless, then do not despair. You have another alternative. If you have a relative or friend who has good credit, they can purchase another home for you. Sometimes, investing in a new home is cheaper than rectifying all the fees and late charges on the home in foreclosure.
At the free HUD home listings on the Internet and see if you see anything of value. The down payment is low and so are the closing costs. There are also other government foreclosure listings available on the web, such as VA and IRS homes.
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