The word foreclosure is being bandied about by financial experts and lay people alike. It has reached crisis proportions in most states, and more and more people are falling prey to the foreclosure process. Despite the governments’ attempts to rectify this problem, it does not appear to be abating, and it is not foreseen that it will abate shortly.
Foreclosure works when a homeowner is no longer able to make the repayments he is obliged to meet on his mortgage loan repayments. There are some reasons why this might occur, but generally speaking, most states are so burdened with credit that even when a small crisis occurs, they are no longer able to make these payments. For instance, the homeowner may have suffered extended ill health, and they have no health insurance. The economic climate is also in turmoil, and many people have become unemployed. And the credit crunch has caused a foreclosure crisis for at with sub-prime loans and arms.
It is important to note that all homeowners still have a fighting chance to stop the foreclosure process if the act quickly. It is not the banks desire to become an owner of another foreclosure. They already have far too many of these on their inventories. If the homeowner approaches his lender in a pending foreclosure, they might be able to work out a solution by reworking the mortgage or many other ways of restructuring the debt. They are used to homeowners approaching them in these matters, and in fact, most foreclosures take place because the lender is unable to contact the homeowner, or because the homeowner does not contact them. This is not a situation where the homeowner should bury his head in the sand.
Foreclosure in some states works quickly, while in others it is a much slower process. The sooner the home owner acts, the better! According to this source, when the homeowner goes into default, the bank will send him a notice informing him that he has a certain time to raise and pay back the default amount plus costs and interest. If the homeowner cannot raise the money within the stipulated amount of time, the property will be sold on auction to the highest bidder. Many US homeowners are not aware of their rights in this process, and this is a problem. Even up to the bitter end they have rights and in many states “Rights of Redemption” exists. This gives the homeowner a certain period after the property has been sold on auction to come up with the prescribed amount of money plus costs to have his property returned to him.
Just remember the first thing any homeowner should do on receipt of a notice of default, is contact his lender. They should be able to work out a plan for him and if this does still not succeed there are still many other avenues where a homeowner can exercise his rights.