A foreclosure is the legal process by which an owner's right to a property is terminated, usually due to default. It typically involves a forced sale of the property at public auction, with the proceeds being applied to the mortgage debt. Put in other words, it is a legal process by which the lender or the seller forces a sale of a mortgaged property because the borrower has not met the terms of the mortgage - also known as repossession of a property. The foreclosure process begins when a borrower/owner defaults on loan payments (usually mortgage payments) and the lender files a public default notice, called a Lis Pendens. The foreclosure process can end in several ways, such as:
Most of the time, home owners prefer paying for their homes through loans as they find paying off a large amount in a single payment is too difficult. They approach an institution such as a bank that offers mortgage loans at a reasonable rate. The story does not end here. The situation gets a bit tougher when the borrower is not able to pay the mortgage off on time. This may occur because of a job loss or some kind of crisis may exist. However the mortgage lender offers a relaxation period hoping that the borrower will be able to make the payment. If the borrower is still not able to pay, then the lender realizes that this is not a win-win situation. The only option for the lender to recover their loan is by foreclosure. Having to pay off a large mortgage amount is not at all an easy task, and having to face foreclosure is a very difficult circumstance.