The word foreclosure is being spread by financial experts and laymen alike. It has reached crisis proportions in the US and more and more people are falling victim to the foreclosure process. Despite attempts by governments to correct this problem, it does not appear to be abating and is not expected to abate in the near future.
Foreclosure actually works when a homeowner can no longer make the payments they are required to make on their mortgage loan. There are a number of reasons why this can happen, but generally speaking, Americans are so overwhelmed by credit that even when a small crisis occurs, they can no longer afford these payments. For example, the homeowner may have suffered from long-term health problems and does not have health insurance. The economic climate is also in crisis and many people have lost their jobs. And the credit crunch has sparked a foreclosure crisis for homeowners with subprime loans and ARMs.
It is important to note that all homeowners still have an opportunity to fight to stop the foreclosure process if they act quickly. It is not the desire of the banks to become owners of another foreclosure. They already have too many of these in their inventories. If the homeowner approaches their lender on a pending foreclosure, they may be able to find a solution by reworking the mortgage or many other ways to restructure the debt. They are used to being approached by homeowners on these matters and, in fact, most foreclosures take place because the lender cannot contact the homeowner, or because the homeowner does not communicate with them. This is not a situation where the owner of the house should bury his head in the sand.
Foreclosure in some states works very quickly, while in others it is a much slower process. The sooner the owner of the house acts, the better! When the homeowner defaults, the bank will send him a notice informing him that he has a certain time to collect and repay the delinquent amount plus expenses and interest. If the homeowner cannot raise the money within the stipulated time, the property will be sold at auction to the highest bidder. Many American homeowners are not aware of their rights in this process and this is a problem. Even to the bitter end they have rights and in many states there are “Redemption Rights”. This gives the homeowner a certain period of time after the property has been sold at auction to raise the prescribed amount of money plus costs to have their property returned to them.
Just remember that the first thing any homeowner should do upon receiving a notice of default is to contact their lender. They should be able to come up with a plan for him and if this is still not successful, there are still plenty of other ways a homeowner can exercise his rights.