Mortgage Foreclosure Process - What Is It?
The mortgage foreclosure process is a legal process by which a person or perhaps an institution that is owed money can force the sale of a property to completely pay off the money that a borrower owes. Let’s review some basic information about borrowing money before we dig deeper into the foreclosure process.
Typically, when people go to the bank to borrow money or request a loan, they’re usually asked to sign a couple of important documents: a promissory note and a deed of trust. The promissory note is the acknowledgment of debt. It means that the borrower owes the bank a specific amount of money and includes the terms and conditions of the loan along with the required repayment.
Let’s imagine for a second that you were an officer at the bank. Would you solely give out loans in the amount of $400,000 based on their word alone? I certainly hope not! I’m sure that you’ll want some sort of guarantee (in writing) that you would indeed get your money back over a specific time period. This guarantee is defined as either the deed of trust or the mortgage.
The deed of trust is not a promissory note but instead an agreement of security. This agreement clearly states that the borrower will pay back the loan and live up to the terms and conditions, otherwise, the lender can force the property to go to sale to try and regain as much of the outstanding loan as possible.
The deed of trust is best explained as the borrower agrees to keep the property insured properly, agrees to maintain the property properly, and, of agrees to make payments in a timely fashion on the promissory note. If, however, the borrower does not live up to these terms and conditions, the banking officials have no choice but to apply the ramifications clearly stated in the deed of trust or mortgage. This is the commencement of the mortgage foreclosure process on the property.
The mortgage foreclosure process is reality and can happen to anyone and any point in their lives. As we post new articles, we’ll try our best to inform you on the best ways to avoid a foreclosure and what options are available to you in order to help save your home.