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What are Foreclosures?
A foreclosure is forced sale of home or property by a financial institution such as a bank or mortgage company. Unless you paid for your property in full (cash) at the time of purchase, most property owners use a 3rd party to provide the additional funds to complete the sale. As a result the owner is obligated to repay the monies borrowed - this is called a mortgage.
When a property owner fails to make payments as part of the loan agreement for their mortgage, the bank or other lien holder may begin foreclosure proceedings to take possession of the property to satisfy the debt owed to them. Many mortgages have an acceleration clause in the mortgage's promissory note. This feature can often trigger a premature foreclosure action. The acceleration clause permits the bank or mortgage holder to declare the whole loan due if the property owner misses a specified number of mortgage payments. Usually, the property owner must be provided with sufficient notice before the lending institution can invoke the acceleration clause.
The foreclosure process is a lawsuit brought by the bank or lender to force the sale of property to satisfy the outstanding debt. In most instances, the court will order a sale of the property after deciding the actual balance due on the mortgage (this includes accrued interest). The proceeds of the sale of your property will then apply to the outstanding debt. If the value of your property is less than the outstanding debt, you may still owe the lending institution for the remainder, depending on the terms of the original loan. As the owner you have the right to pay the bank off before the foreclosure sale in order to keep your property.
If you think you may default on your mortgage and fear that you may lose your property through foreclosure, an experienced lawyer may help you determine what other options available to you, including filing for bankruptcy. An attorney can also represent you in a foreclosure proceeding to make certain your interests and rights are protected.
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