What does it mean when a house undergoes "foreclosure"?

Question

I tried wikipedia but i am not sure i was able to absorb the gravity of the situation.

Why does foreclosure occur and what are its implications?

Thank you.

Answer 1

Foreclosure is the name of a legal process whereby a mortgage company attempts to force the sale of a house because the borrowers missed their mortgage payments.

If you borrow $100,000 from a bank and agree to pay $1,000 a month to pay off the loan over 30 years, and then you miss 3-6 payments in a row, the lender will likely sue you for "foreclosure" of the mortgage loan.

That means that they will start a lawsuit in court where they have to show that you are behind on the mortgage payments. The judge will have to agree that you are behind, and will order that the house is auctioned off to pay off the mortgage.

Once the house is auctioned off, the courts will then order you to be evicted from the house. That means that, whether you are ready to move or not, the county sheriff will show up, move all of your belongings out into the front yard, and change the locks.

Foreclosure occurs because people fall behind on their mortgage payments after buying a home. The implications are bad credit for years afterwards and the possibility of being thrown out of the house with nowhere to go.

Hope that helps.

ForeclosureFish

Answer 2

Ownership shifts to the mortgage holder.  If you have to foreclose on a mortgage someone owes you, you will benefit if he owes a lot less than you can sell the house for.  If the house won't sell for as much as he owes you, then you lose money and he may be taxed on the difference as income from debt forgiveness.

Answer 3

Home foreclosure is a process by which a lender regains a property which they have financed. Typically, this is because the borrower or homeowner is behind on house payments and is unable to catch up. It can be due to various reasons such as sub prime crisis, losing job, non affordable house with huge mortgage payment etc.

When the lender forecloses on the homeowner, the homeowner must move out of the house, therefore, losing all possession of the property and jeopardizing any possible equity that the homeowner may have in the home. There is a legal time frame, which varies from state to state, which determines how long the foreclosure process can take.

But Foreclosure can be prevented and has to be dealt immediately as time is of the essence when you are behind on house payments. Each day that passes makes it that much harder to get a work-out agreement with your lender that you can live with. Foreclosure victims need moral support, proper guidance, confidence from their family, friends & neighbors to plan for better future. There are several options to stop foreclosure and protect your credit history. Loan Modification, Forbearance Agreement, Deed in Lieu and a short sale are some of the techniques used to stop foreclosure.

Answer 4

basically, you are not making your making your payments and the bank takes possession of your house or property and sells if for less than it is worth.

Answer 5

People couldn't afford the payments any more.

Answer 6

This is when the owner of a property defaults on a loan that the bank gave them to purchase it.  It is when the borrower of that loan stops paying on the loan.  The bank doesn't usually start foreclosure on a property if the home owner only misses one payment, you have to miss several.  It doesn't just happen suddenly, you will know, and receive warning from the bank long before it happens.  You have to vacate the property because legally the bank "pushes" you out through the court system.  It also goes on your credit report and drastically drops your points for the next 7 years.    With the economy today, it is happening in record numbers.

Answer 7

Basically, after non-payment of the mortgage, the bank (or whoever made the loan) repossesses the house since the house was the collateral of the loan. If the people living there do not move out on their own, they are evicted, sometimes forcibly, and their possessions put out on the street. The bank makes no money from an empty house so they sell it at auction if necessary. after fees and the loan balance is paid off, if the selling price is high enough, the previous owners get the profits. Often the house sells for less than what is owed on it and the bank takes a loss and the former owners get nothing. Messy.

Answer 8

Foreclosure is the process that a lender uses to pay off a borrower's loan after the borrower defaults on making payments.  States use different methods to make this happen, but the majority of the states permit the lender to provide notice to the borrower of a default, then provide notice of its intention to sell the property to pay off the defaulted loan, then sell the property to pay off the loan.  

Any amount short of the loan may be recouped by collecting against the defaulted borrower.

The implications of foreclosure vary, but two things are certain:  the house is sold and the borrower must move out. The borrower's credit report will reflect foreclosure and future loans will be more difficult to obtain.

http://www.foreclosure-fight.com

PS - Very technically, the lender forecloses the borrower's right to redeem the property...that is, the lender interferes with the borrower's right to keep the real estate through a sale.