Foreclosure is a legal process that involves auction or sale of property (real estate) in the case of default in the mortgage payment. Foreclosures usually arise as a result of bankruptcy or financial distress of the borrower.
Whether you are a mortgage borrower or you want to invest in real estate through the purchase of foreclosed property, you will need to be conversant with the technical terms relating to it. This guide intends to cover some of the important key terms relating to foreclosure auctions, such as bankruptcy, mortgage, redemption and delinquency.
BankruptcyFiling for bankruptcy is one of the tools used to avoid foreclosure. Though it may sound extreme to file for bankruptcy, it can help the property owner avoid the loss of the property or at least avoid the foreclosure proceedings for some time.
MortgageA mortgage is an instrument that secures the repayment of a loan. In other words, mortgaging is the process through which a borrower takes a loan by collateralizing personal property.
Non-judicial foreclosureThe non-judicial foreclosure process involves foreclosing a mortgage without filing a lawsuit or obtaining a court order. This is possible in cases where a deed of trust gives the lender the right to sell the property in case of default.
Redemption periodRedemption period is the additional time given to the property owner to stay in the property. State laws specify the duration of redemption.
U.S. Department of Housing and Urban Development.