The foreclosure process lets a lender repossess the amount allocated on a loan that’s failed to pay by taking or selling property ownership making the loan secure. This process starts when an owner or borrower fails to pay loan payments and a lender sorts a public notice of default. This process can result in one of these ways:
- The owner or borrower pays the amount of default in order to restore the loan throughout the pre-foreclosure recognized by the laws of the state.
- The owner or borrower sells the estate to a mediator during pre-foreclosure. The owner or borrower is allowed to pay the loan due to the sale, which avoid holding a pre-foreclosure on the credit history of the owner/borrower.
- After pre-closure, a third party pays for the estate at a public sale.
- A lender takes property ownership commonly with the plan to re-sell. The ownership can be taken through an arrangement with the owner or borrower during the pre-foreclosure process or by purchasing again the estate at a public sale.
The process provides three buying opportunities.
In pre-foreclosure, purchasing a property involves dealing with the owner or borrower and proposing to purchase the property. The owner or borrower can leave with something that can be shown for any property equity and prevent an unpleasant mark on his/her credit history.
In case the loan isn’t reestablished by the closure of the period of the pre-foreclosure, possible buyers are able to bid on a property at the public auction. Often times, buyers need to pay cash at the public sale and possibly don’t have ample time to look into the property condition and title earlier. The public auction, however, usually offers some very good bargains and evades the randomness of dealing straight with the owner or borrower.
If a lender takes property ownership, either by an arrangement with the property owner at a public auction or during the pre-foreclosure, usually, he/she would like to resell the property so that he/she can recover the loan amount that’s not paid.