More and more homes have been going into foreclosure over the past year or two than ever before. One reason is the poor economy overall, but perhaps the biggest reason is the sub-prime lending fiasco of the past few years that allowed too many people to enter into mortgages they shouldn’t have or couldn’t keep up with.

When a home goes into foreclosure, the lender obtains a court order to terminate the agreement and take possession of the property back from the signer. This is usually the bank that underwrote the mortgage agreement or loan.

When someone takes a mortgage or home loan, the lender obtains a security interest from the borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults on payment, the lender or mortgage holder can try to repossess the property. This is a foreclosure.

Besides failing to pay the mortgage note or loan, other lien holders can also foreclose the owner’s right of redemption for other debts, such as for overdue taxes, unpaid contractors’ bills or overdue HOA dues or assessments.

The foreclosure process as it relates to a residential mortgage loan happens when the bank or other secured creditor takes possession of the property after the owner has failed to comply with the mortgage agreement. Most commonly, this is happens as a failure to meet payment of the home loan.

In foreclosure, the lender can opt to try and sell the property and keep the proceeds to pay off its mortgage and any legal costs. When this happens, this is considered as a lender foreclosing on the mortgage or loan. While there are some legal remedies, it is obviously much better to avoid going into foreclosure to begin with.

This entry was posted on Monday, January 18th, 2010 at 5:33 am and is filed under Mortgage Loan Foreclosures. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.