CLICK to register for our next FREE Foreclosure Options Seminar
What Exactly Is a Mortgage Foreclosure?
Given the state of the Sarasota and Manatee County Florida housing market, and unless you've been living in a cave for the last two years, you probably hear the term "foreclosure" a thousand times a day -- but what exactly does the word mean? You are about to find out . . .
A mortgage is the, “pledge of real property as security for a debt.” When you “mortgaged your home,” you made an agreement with the lender that in exchange for them lending you the money to purchase the property (the agreement for the “money part” of the transaction is called a “note”) you would pledge the house as “collateral” for that debt (the “pledging as collateral” part of the transaction is called a “mortgage”).
CLICK to register for our next FREE Foreclosure Options Seminar
In simple terms, you agree that if you don’t pay the money back they can take the house! The “note” proves that you borrowed the money in the first place, and the “mortgage” is your permission for the lender to place a “lien” on the property, and to take it back through a process called “foreclosure” if you fail to repay the loan. It’s a simple business contract.
To take this one step further, some States (all real property law is State law, which means that the rules are slightly different in each of the 50 States) require “judicial foreclosure,” and others allow for “non-judicial foreclosure.”
Florida is a “judicial foreclosure” State, which simply means that a lender is never allowed to automatically foreclose on a property as a term of the contract, but must always undertake a court proceeding (before a judge,
hence the term judicial foreclosure) in order to take a property back.
CLICK to register for our next FREE Foreclosure Options Seminar
In a judicial foreclosure State, a foreclosure is nothing more than a particular type of lawsuit. It starts when the lender “files” with the court in the county where the property is located, after which a notice of complaint is issued (“papers are served”) to the borrower and any other parties having rights/claims in the property.
Depending on the jurisdiction, the borrow will have a certain amount of time to respond to the complaint, and the lender will have a certain amount of time to respond to the borrower’s response, etc. . . the process can get dragged out and in some places a foreclosure can take a couple of years to resolve.
So, now you know what a foreclosure is!
Comments(2)