Mortgage foreclosure is an official, legal process wherein a person, a group, or a company owes money to a lender and can't pay. In which case, the lender would force the sale of a real estate property involved in order for them to pay off the loan completely. To know more about the foreclosure process, basic information about borrowing and lending money has to be tacked first.
When you go to a bank and request for a loan, you have to sign several documents. These usually are the deed of trust and the promissory note. The promissory note is the proof that you are acknowledging your debt. It shows the money you owe the bank and the manner with which you are supposed to pay it back. For example, you are the banker. Surely, you won't give a check amounting to $500,000 with only a verbal promise that the other party would pay it back. You would definitely want a strong, written guarantee that your money will be returned according to the conditions as indicated therein. This is what you call the deed of trust.
The deed of trust isn't a promissory note. It is an agreement of security. The agreement states clearly how the borrower would pay for the loan. It also states that the borrower has to follow all the terms and conditions contained therein. If any of the terms were neglected, the lender can force the sale of the property in order to regain the outstanding loan amount.
The deed of trust may also require the borrower to insured the property properly, maintain it, and of course remit payments timely. If the borrower fails to do all or any of these, then the banking officials would have no other choice but to apply the consequences that are also stated in the signed mortgage or deed of trust. This is when the process of mortgage foreclosure on the property starts.
Mortgage foreclosure is a real process that is implemented both by the lender and by law. It can happen to you if you're not careful with your finances. This is the downside of getting a loan from a bank. Of course you have to pay for what you borrowed. The hardest part is always the manner as to which you have to pay. There are many ways to avoid foreclosure on your property. Today's financial experts are creating solutions for homeowners who are finding it hard to pay off a property that they have obtained on a mortgage.
