Foreclosure Sales– What Every Homeowner Should Know

 Summary: There are several procedures to be followed before a bank can make a foreclosure sale due to non-repayment by a homeowner. At any stage of this process, the homeowner can repay the bank to get back his property. There are also other options to retain the property for which a homeowner can get advice from a debt counsellor.

A foreclosure sale takes place when a borrower is unable to make payments towards his mortgage as per the agreed schedule and the bank recovers the money owed to it by selling the property. When a mortgage is entered into, the title remains with the bank and does not get transferred to the home owner until the last scheduled payment towards the mortgage is made. However, there are certain procedures to be followed before the bank can sell the property and every home owner should be aware of their rights with regard to a foreclosure.

The exact procedure for a foreclosure sale may vary from one State to another; however before the bank can sell the property, there are certain procedures to be followed. As the first step in the process, the bank has to send a formal communication by certified mail to the borrower informing him about the default in payment. The letter usually outlines the period of time and the specific amount that the home owner has to pay the bank in order to avoid foreclosure.

If the homeowner is unable to pay the amount due to the bank within the period specified in the notice, then the bank can proceed with the foreclosure either through the judicial process or a non-judicial remedy depending on the laws of the State and the clauses in the mortgage deed. Under the judicial process, the bank will have to approach the court to get a clearance to sell the property. Once the bank gets the authorization to sell, then a formal notice regarding the sale is sent to the homeowner who has to vacate the property within a specified time.

The bank then puts up the property for auction or sale and the property is sold to the highest bidder if it is close to or higher than the expected price. In case the bids are not suitable, the bank may purchase the property with the intent to resell at a later date. A point that every homeowner should be aware of is that at any stage in the process before the final foreclosure, he can choose to repay the bank the amount due and take possession of the property. There are other options available to a homeowner such as negotiating with the bank to accept a lower payment, refinancing the mortgage, selling the home, making a short sale or modifying the loan. For help in finding out the best option, contact me!

Written by Carol Pefley

www.carolpefley.com

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