Foreclosure originally starts off with a default in payment made by the lender. It pertains to a judicial procedure which allows a lender to take back the possession on the defaulted property. If payments have been neglected successively up to half a year then the lender files what is so called Default Notice.

The lender notifies the borrower up to 5 days to begin a period of reinstatement. The concerned entity will determine a repayment procedure and repayment amount for the borrower to halt the process of foreclosure. This is known as the pre-foreclosure period.

If the loan defaulted is not properly carried out, a state date for the foreclosure is firmed up. A Notice of Sale will be received by the borrower. This Notice will also be sent to the government`s office concerned where the property is located. It will also be published in the print media. The property is sold during this point to the highest bidder. A deposit will have to be released upfront. The bidder will then obtain the trustee's deed. This allows the borrower to pay the defaulted loan and ensure that the credit report does not have a default stated.


Sometimes the mortgage lender himself will take ownership. This may be through an agreement with the borrower in the pre-foreclosure period. In general the lender will choose to deal the property and salvage the loan. The lender will offer the essential maintenance the property may require.

The foreclosing lender schedules the auction and an opening bid. This is equivalent to the borrower's loan balance to include outstanding, accrued interest, attorney fees and any miscellaneous fees involved. In case the highest bid is less than the opening bid, the attorney will buy the property on behalf of the lender. If the opening bid is not met, the property is labeled as real Estate Owned.


Source: articlealley.com