Foreclosures - What is a Foreclosure?
The forced sale of property by a financial institution is called a foreclosure. Foreclosures usually occur when a property owner agrees to pay back their home loan (mortgage) made by a lending institution (usually a bank), using the home as collateral for repayment of the loan. If the property owner does not pay back the home loan, the lending institution has the right to foreclose on the property, taking it away from the property owner, and using it to pay for the unpaid loan.
What is a Mortgage?
A mortgage is a lien on property, by a bank or financial institution, for money that a property owner borrowed from the institution in order to pay for that piece of property. When a mortgage has been signed and approved, the property owner will have the obligation to pay back the loan for the property, plus interest, and the financial institution will have the right to force the sale of the property (foreclosure) if the property owner defaults. Learn more about your options and whether you need a mortgage lawyer.
Acceleration Clause in the Mortgage's Promissory Note
An acceleration clause is an important feature in a mortgage, and can often cause a premature foreclosure action. The acceleration clause allows the bank to declare the entire loan due if the property owner misses a certain amount of mortgage payments. Notice that if a mortgage has an acceleration clause, the bank has the right to sue not only for the missed payment but also for the entire sum of the loan. Generally, the property owner must be provided with adequate notice before the lending institution can utilize the acceleration clause.
The Foreclosure Process
A foreclosure process is technically the lawsuit brought by the financial institution to force the sale of property to satisfy an outstanding debt. Typically, a court will fix the balance due on the mortgage (including interest accrued) and orders a sale of the property. The court will then apply the proceeds of the sale to the outstanding debt. The owner, however, has a right to pay the financial institution off before the foreclosure sale in order to keep the property.
Should I Consult an Attorney if my Property is being Foreclosed on?
If you feel you may default on your mortgage and lose your property via foreclosure, an experienced attorney can help you determine if there are other options available to you, including filing for bankruptcy. A lawyer can also represent you in a foreclosure proceeding to make certain your rights and interests are protected.
Consult a Lawyer - Present Your Case Now!
Last Modified: 04-05-2012 02:10 PM PDT
Did you find this article informative?
Link to this page