When a homeowner fails to repay a loan used to buy a home, the home is considered to be in foreclosure. What this ultimately means is that ownership of the home passes from the owner to the bank or lender that provided the loan.
Foreclosureoccurs when a lender seizes and sells a borrower's security after the borrower has failed to pay the lender. The term is most often associated with real estate.
Moving away from your home voluntarily may seem like the best solution when your home is worth less than you should. However, this action may have financial implications in the future. In some states, you may have to pay back a portion of your mortgage debt even after the home has gone into foreclosure. In addition, the impact on your credit may make it difficult to rent or buy a home in the future.
It may be best to explore other foreclosure options with your mortgage company before making the decision to leave your home. Keep in mind that your mortgage company doesn't want to foreclose your home. Just like there are consequences for you, the foreclosure process is time consuming and expensive for them. They want to work with you to resolve the situation.
However, some homeowners simply don't take advantage of the help available and foreclosure becomes the only option. A foreclosure is the legal process in which your mortgage company obtains ownership of your home (i.e., a foreclosure occurs when the landlord has failed to make payments and has breached or violated the terms of your mortgage loan). In both types of foreclosure, the homeowner receives the foreclosure notice, the legal notice is published in the local newspaper (in most cases), and the house is sold at a public auction. In the case of judicial foreclosures, you will be legally notified of the pending action and the court will approve or set the date of foreclosure and the sale.
You Have Nothing to Lose (and Much to Gain) by Working with Your Mortgage Company to Avoid Foreclosure. If foreclosure is imminent, other options may no longer be available. However, you may still be able to leave your home without having to go through foreclosure. This means that you won't have foreclosure on your credit history and you may qualify for relocation assistance to ease your transition to a new home.
Explain your current situation Prepare to describe your current difficulties and explain why you're having trouble making your mortgage payment, why it's a long-term problem, and confirm that you're ready to leave your home to avoid foreclosure. Your mortgage company will need to understand the reasons why you're struggling to find the right solution for you. Contact your mortgage company. Tell them that you're interested in a mortgage exemption and want to see if you qualify.
Your mortgage company wants to help you avoid foreclosure and, in most cases, will be willing to work with you. The biggest mistake you can make is waiting longer to act. Contact your mortgage company today to determine if you can avoid foreclosure. If you need more help (before or after contacting your mortgage company), contact a housing counselor.
Learn how to identify and avoid scammers who promise immediate relief in the event of foreclosure. Find answers to the most frequently asked questions about your mortgage and the different options for avoiding foreclosure. Visit our glossary of key terms to better understand the foreclosure options available. A foreclosure is when the lender or bank takes possession of your home.
This means, in a nutshell, that you have lost your home. .