Foreclosure refers to the legal process by which a lender (mortgage company) brings a lawsuit against a homeowner in the Supreme Court of the mortgage property’s location. Typically, the mortgage holder is a bank or finance company. In New York, the foreclosure process is a judicial procedure. It requires the lender to file a lawsuit to foreclose on the property.
Circumstances of a Foreclosure
Foreclosure happens when a borrower fails to pay their mortgage payments, and the lender or mortgage investor must repossess the home. Foreclosure can also happen when the homeowner fails to pay their property taxes or homeowners association fees.
During foreclosure, the mortgage lender may seize and sell the property to recoup the money it lost from the mortgage default. The lender is allowed to take back the home because a mortgage is a secured loan. That means the borrower guarantees repayment by providing collateral. If they can’t repay the loan with money, they use the collateral instead.
In the case of a mortgage, the home is used as collateral. Upon signing closing documents, the borrower recognizes that the lender has the right to foreclose on the home if they default on the loan. This is also known as putting a lien on the title of the home. Once the mortgage is paid off, this lien on the title of the home is removed.
What You Need to Know
Neglecting your mortgage payments and ignoring the foreclosure issue is the worst course of action. Some mistakenly believe inaction will postpone the problem, but it can actually exacerbate the situation. Some people may assume that not doing anything will delay the problem. However, the process does not delay and can even worsen it.
If you haven’t contacted your lender, you can call to attempt to negotiate a solution or be reviewed for loss mitigation options. Loss mitigation is the process of working with a mortgage lender or servicer for relief or repayment options when a borrower is struggling. It is also known in some cases as retention.
We understand that navigating the foreclosure process can be overwhelming. To stay up-to-date with the latest information, changes in foreclosure laws, and helpful tips for homeowners
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