What is Foreclosure and Why it Happens

Foreclosure is a legal process that happens when a borrower fails to make payments on their home loan. The lender will then take back the property and sell it in order to recover its losses. This can be a difficult process for both the homeowner and the lender. In this article, we will discuss what foreclosure is, why it happens, and how you can avoid it.

What does foreclosure exactly mean?

Foreclosure is a legal process in which a lender attempts to recover the balance of a loan from a borrower who has stopped making payments by selling the property that was used as collateral for the loan. There are two types of foreclosure: judicial and non-judicial. Judicial foreclosure is when the lender must go through the court system to foreclose on the property, while non-judicial foreclosure does not require any involvement from the court. In most cases, foreclosure happens because the borrower has fallen behind on their mortgage payments. This can happen for a variety of reasons, such as job loss, illness, or divorce. You will probably need a lawyer so if you live in Florida, you can use a Florida Foreclosure Lawyer, as different areas have different laws on foreclosure. Once the borrower falls behind on their payments, they will typically have a grace period of 30-60 days to catch up. If they are unable to do so, the lender may begin the foreclosure process.

How to prevent foreclosure?

If you are struggling to make your mortgage payments, the best thing you can do is contact your lender as soon as possible. Many lenders are willing to work with borrowers who are having difficulty making their payments. They may be able to offer a repayment plan or extend the terms of your loan. If you are facing financial hardship, there are also government programs that can help you keep your home. These include the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP). To prevent foreclosure, it is important to stay current on your mortgage payments and communicate with your lender if you are having difficulty making them. With a little effort, you can avoid foreclosure and keep your home.

Is foreclosure a common occurrence?

Foreclosure rates have been on the rise in recent years, but they are still relatively low. In 2018, the foreclosure rate was 0.51%, which means that about one in every 200 homes was in some stage of foreclosure. While this may seem like a small number, it represents a significant increase from previous years. In 2017, the foreclosure rate was 0.41% and in 2016 it was 0.36%. The good news is that foreclosure rates are still well below their peak of around four percent that we saw during the housing crisis in 2008. 

Foreclosure can be a difficult and stressful process for both borrowers and lenders. However, by understanding what foreclosure is and how to prevent it, you can protect your home and your finances. If you are struggling to make your mortgage payments, be sure to contact your lender as soon as possible to discuss your options.

 

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