Your mortgage is probably the most important bill that you pay every month. If you fail to pay the mortgage, foreclosure can happen and you can lose your home.
What exactly is a home foreclosure?
If you miss some payments; your mortgage lender has the right to foreclose on the home by selling or repossessing the property. In many cases these properties are auctioned.
Judicial foreclosure
In the case of judicial foreclosure the lender sues the homeowner. If the owner of the house is unable to respond to the lawsuit, the lender wins. The property is then sold at auction. A court official is in charge of the auction. Any participants who are interested in purchasing the home have to compete with the mortgage lenders bid. If no one outbids the mortgage lender, the house is repossessed. This is frequently referred to as a “courthouse auction”.
Foreclosure by the Power of Sale
In this case the deed to the house goes directly back to the mortgage lender. The house is then sold by a real estate agent. Proceeds from the sale are used to pay off the amount owed by the former homeowner. If the proceeds are not enough to cover the mortgage the lender may issue a deficiency judgment.
Strict foreclosure
The court orders the borrower to pay the mortgage within a certain period of time. If the borrower fails to bring the mortgage current, the deed and the property go directly back to the mortgage lender without any obligation to sell it, however they most often will try to sell the property.
Judicial and foreclosure by power of sale are the most commonly used methods in United States.
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