I have a friend who currently owns a house which he bought at the real estate peak, so now his house is 120K less. With his family’s help he would like to purchase another home and forclose the old house. Can the banks sue him for the remainder of the loan? What will happen if he just walks away from the old home?
What is Foreclosure?
Anyone in the real estate market and even anyone who just owns a
home should be aware of what foreclosure is. This is a process that
you really need to be educated on, and which can also help you save
some money as well.
Foreclosure is defined as being the legal proceeding in which a
mortgagee obtains a court ordered termination of a mortgagor’s
equitable right of redemption. It is important to be aware of the issue
of foreclosure because foreclosure numbers are growing daily.
This is not only in the United States but areas all around the world.
In fact, foreclosure is so common that of the one hundred twenty or so
million homes that are in America alone, more than 4% are facing
How it Starts
The foreclosure process begins when the homeowner fails to
pay their mortgage, for whatever reason. This could be due to
any one of a number of different reasons, including terms of the loan and medical challenges for instance.
Once a home goes through this process they are put up as a
foreclosure listing, and this generally means that the person who buys the house will get a great discount. Many people who are in the market for a new home will often look specifically for foreclosed homes, because they know that they will be getting the best value, and it is not as though there is anything wrong with the home.
Instead, it is that the homeowner was simply unable to afford the
mortgage payments and so they were forced out of the home. This is
really a great way to save a buck and so if you are looking to buy a home but are strapped for cash or otherwise just want to save yourself as much money as possible, you will definitely want to look for a foreclosure listed home.
Keep in mind that foreclosure proceedings typically start with a formal
demand for payment which is usually a letter issued from the lender.
Depending on the particular state that the person is living in, the lender
will issue this notice when the homeowner has been a couple months
delinquent on the mortgage payments.
Just make sure that you mention this to your real estate agent when
they are helping you look for a home, so that you will be able to come
out with the best possible results and find the home of your dreams,
at a price that you can afford.