subject: What Is Foreclosure And How They Classified? [print this page] Foreclosure is the legal and professional scheduling in which a mortgagee, or other lien proprietor, generally a lender, obtains a court ordered extinction of a mortgagor's equitable right of salvation. Generally lenders obtain a security interest from a borrower who mortgages or pledges an advantage like a house to secure the loan. If the borrower defaults and the lender try to reclaim the property, courts of equity can funding the borrower the equitable right of salvation if the borrower repays the debit. Whereas this equitable right exists, the lender cannot be confident that it can effectively repossess the property, thus the lender seeks to foreclose the equitable right of salvation. Other lien holders can also foreclose the owner's right of redemption for other debits, such as for past due taxes, unpaid contractors' bills or overdue homeowners' union dues or appraisals.
The foreclosure process as functional to housing mortgage loans is a bank or other secured creditor selling or repossessing a package of real property (immovable property) after the proprietor has failed to obey with an agreement between the lender and borrower called a "mortgage". Usually, the infringement of the mortgage is a default in payment of a promissory letter, protected by a lien on the property. When the process is complete successfully, the lender can trade the property and remain the proceeds to pay off its mortgage and any legal costs, and it is normally said that "the lender has foreclosed its mortgage or lien". In the case of promissory note was made with a recourse section then if the sale does not bring enough to give the existing balance of principal and fees the mortgagee can file a claim for deficiency judgments.
Types of foreclosure
Within the United States and most if the other countries, several types of foreclosure survive. Two of them are foreclosure by judicial sale and foreclosure by power of sale. These two are widely used, but some of the other modes of foreclosure are also possible in a few countries.
Foreclosure by judicial sale
Foreclosure by judicial sale are commonly known as Judicial Foreclosure and is available in every state and required in many, involves the sale of the mortgaged property under the administration of a court, with the profits going first to satisfy the mortgage; then other lien holders; and, finally, the mortgagor or borrower if any proceeds are left. While all other legal actions, all parties must be informed of the foreclosure, but notification requirements vary extensively from state to state. A judicial conclusion is announced after pleadings at a short hearing in a state or neighboring court. In some of the rare instances, foreclosures are filed in Federal courts.
Foreclosure by power of sale
This type of foreclosure are allowed in many states if a power of sale section is included in the mortgage or if a Deed of trust was used instead of a mortgage or borrower. In some of the states mortgages are actually called as deeds of trust. This process involves the sale of the assets by the mortgage holder without court supervision. It has usually more method than foreclosure by judicial sale. As in judicial sale method, the mortgage holder and other lien holders are respectively first and then applicants to the proceeds from the sale.
