What is Foreclosure?

When a home is purchased, the bank or financial institution (usually a lender) holding the mortgage has taken a security interest in the property. The security interest allows the lender a right to regain the money that is owed on the property. A Foreclosure is the legal process a lender will use to regain the money by selling a house through a public auction or traditional methods if the homeowner does not fulfill his / her end of the mortgage agreement, usually because of missed payments.

The Foreclosure Process

The foreclosure process moves through three stages: pre-foreclosure, foreclosure, and the foreclosure auction. The pre-foreclosure stage is when the homeowner defaults on the mortgage through missed payments and the lender files a public Notice of Default.

During the foreclosure stage, the process becomes official when the lender files a public and legal notice of foreclosure with the county Record's Office. Soon after, the court will grant the lender a foreclosure and set a date for public auction of the property.

The third and final step of the foreclosure process is the foreclosure auction, also called the trustee sale. At an auction the property is awarded to the highest bidder, a contract issued by the lender and a closing date on the property is set.

What Can Be Done?

Always remember that honesty goes a long way. Often times, a homeowner facing foreclosure will attempt to avoid or prolong facing the reality that they have unfortunately gotten to the point where they are facing the beginning of the foreclosure process.

If you are struggling to meet your mortgage repayments do not risk foreclosure by doing or saying nothing. Most mortgage lenders would much prefer to know if you are struggling with your repayments rather than know nothing. If you inform them that you are struggling they can work with you to help you through any rough times, quite often allowing you more time to pay or freezing any additional interest until you have caught up on your repayments. If they do not know, they can not help you.

Tips to Avoiding Foreclosure

Tip #1: Talk to the financial institution. Personally contact them as soon as you can. Do whatever you can do to initiate direct communication. Call them, visit them, or write to them. Connect with an individual or individuals of authority. Tell them your story. Explain what you can or cannot do. Include details like amount, time, terms and conditions as well as other considerations. Ask for time to make a decision.

Tip #2: Consult a professional. Get help from lawyers who specialize in property matters, foreclosure experts and others who are qualified in this field. Get their advice but do not hire them just yet. The fees you have to pay them can be better utilized for paying for your loan. Additionally, if you hire them and they act for you, the financial institutions would not take too kindly to your story of being unable or your difficulty in repaying them.

Tip #3: Check out whether there are other sources that can help you. These could be credit counseling agencies, private companies or any other body that specialize in debt restructuring and asset protection. They may be able to work out something more favorable to your situation. There could also be individuals who are willing or make it their business to help with such cases. Don’t be afraid to ask for help.

Conclusion

Facing foreclosure can be a very emotional and frustrating experience. It can also be quite embarrassing making it extremely difficult to take any action to get the situation resolved. But it does not have to be the end of the road. Get all the help you can before you act. Do not let fear paralyze you. Help is available. Don’t be afraid to ask for it.