What is a foreclosure

How foreclosures work

Foreclosure is the legal process in which a financial company mainly a bank or other type of secured creditor repossesses and disposes of an immovable property in the case when the borrower has failed to fulfil the responsibilities agreed upon in the mortgage contract with the lending company. Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that "the lender has foreclosed its mortgage or lien".

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There are two primary types of foreclosures.

1. Foreclosure by judicial sale
2. Foreclosure by power of sale.

The foreclosure process does not take long really; it could usually take as little as 3-4 months to complete.

If you are faced with possibility of your home undergoing a foreclosure process, it can be avoided.