©Sujin Jetkasettakorn - freedigitalphotos

©Sujin Jetkasettakorn – freedigitalphotos

When facing and trying to avoid foreclosure, it is important to understand which type you are dealing with.  All types of foreclosures do have one main thing in common, which is that they involve the lender taking back property that a borrower has failed to make regular payments on their secured loan.  This rest of article will break down the different types of foreclosure one may face.

Judicial Foreclosure
This is the most common type of foreclosure one will be trying to fight against.  It is allowed in every state and in some it is even required.  The judicial foreclosure involves the sale of the mortgaged property on which the borrower has defaulted on their loan repayment agreement.

The sale occurs under judicial supervision.  The proceeds from the sale will then be used to pay off the existing mortgage; any other liens and any other proceeds will go back to the borrower.  This is basically what happens when most homeowners can’t find their way out of foreclosure and they lose their home.

Power Of Sale
This type of foreclosure allows the mortgage holder to sell the property without judicial involvement.  Once the property is sold, the borrower can then use the money to pay the mortgage holder and any other liens.

There are two qualifications that must happen before this type of foreclosure can be put into action.  The first is the borrowers’ individual mortgage contract must contain foreclosure by power of sale terms.  The second is the state in which the property is located must allow for this type of foreclosure.

Strict Foreclosure
This type of foreclosure is only allowed in a few New England states.  A strict foreclosure proceeding is where the lender goes to court and requests a foreclosure.  The judge then provides the defaulting borrower with a period of time in which to make the loan payments current.  If the borrower is unable to make the loan payments current then the lender gets the title to the property and has no obligations to attempt to sell it and provide proceeds to the borrower.  This type of foreclosure usually is only available if the value of the property is less than the amount owed on the property.

The time frame of a strict foreclosure is usually set be the judge.  It can be as little as a few weeks or as long as several months.  Borrowers do have the option of trying to sell the property in order to pay off the mortgage, before losing the property and any proceeds.  The borrow can also try to come up with enough money to become current on their loan.

So there are different types of foreclosure a homeowner can consider.  But in the end it is about finding ways to save your home and avoid foreclosure going on your credit.  This may mean borrowing money, looking for a second job or selling your home in a short sale.  Talk to a local foreclosure attorney, get some one on your side who is knowledgeable in the whole process.  This can help with the stresses and worry if you are doing everything possible to stop the foreclosure.

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