A bank foreclosure occurs when a person obtains a mortgage through a bank lender, but cannot keep up with the payment terms. In such cases, the bank may repossess the home and sell it in order to make up for the outstanding payment amounts. This all depends on the lending arrangement between the bank and the homeowner.
Usually, the bank will give the person sufficient notice about the missed payments and about the upcoming foreclosure process. A bank foreclosure can occur due to several factors, including unexpected expenses or a loss of employment.
Bank foreclosures are often categorized as "foreclosure by power of sale". This refers to the fact that the bank reserves the power to sell the property in the event of a default on payments.
The other major category of foreclosures is judicial foreclosure. This is a foreclosure that is overseen and executed through the intervention of the court. Here, the court may regulate the terms of the foreclosure sale. Bank foreclosures can sometimes become judicial foreclosures, especially if there is some sort of dispute during the initial process.
Bank foreclosures can sometimes be avoided through a negotiation with the lending company. For instance, you may attempt to renegotiate the monthly payment terms so that they are accommodating for your financial situation. Or, you may wish to refinance your mortgage if possible, as this can open up different financial options.
Foreclosure can also be avoided by keeping up with payments in the first place. Often times, missed mortgage payments are simply the result of poor financial planning. For instance, overspending with credit cards can cause unnecessary debt. You may wish to speak with a financial adviser or with an attorney if you need more help with your options.
Bank foreclosures have been somewhat common in the past decade due to the housing crisis. You may wish to hire a foreclosure lawyer if you need assistance with bank foreclosure issues. Your attorney can help you file a claim and can represent you as needed during hearings. Also, your lawyer will be able to discuss possible options that might be available to you.