How to Stop Foreclosure - Steps You Can Take to Keep Your Home Safe

Thousands of homeowners are facing foreclosure proceedings despite the fact that occurrences of this action have decreased recently. Foreclosure is scary, especially when one does not clearly understand what happens when house is foreclosed on. The following will delve into the process of foreclosure so anyone facing it knows what they’re dealing with.

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Phoenix, AZ -- (SBWIRE) -- 01/08/2013 -- Before going into what happens when house is foreclosed upon, it’s important to understand that there are three types of this action: Foreclosure by judicial sale, foreclosure by power of sale, and strict foreclosure. What a person can expect from this process depends on which type of foreclosure it is. In all foreclosure proceedings, a mortgage loan holder files the appropriate paperwork with a local court, which can then terminate the homeowner’s possession of the house and turn it over to the lien holder. All states follow the process of judicial foreclosure. A judge appoints a person, generally a local attorney or sheriff, to oversee the sale of the house. A date is set for the public auction of the home. If it doesn’t sell at the auction, another auction may be held. If there are no bids or the bids offered are too low, the bank will bid and purchase the house. The court immediately begins the process of assigning the title for the house to the lien holder. This procedure can take up to four months.

More of what happens when house is foreclosed on includes the fact that if the home is located in one of the 29 states that allow “power of sale” foreclosure, the mortgage holder can sell the house without it being overseen by a court-appointed commissioner. This can happen rapidly as soon as a judge grants the lender title to the house. In some states, such as New Hampshire, Connecticut, and Vermont, courts allow something called “strict foreclosure.” This occurs when the amount owed on the home is more than the amount the house is worth. In this type of foreclosure process, the court turns the ownership of the home over to the mortgage holder without waiting for a sale. Once the lien holder has the deed, the house can be sold through regular real estate avenues.

There are ways to prevent foreclosure, including contacting the mortgage holder to request assistance in lowering the payments and/or interest rate on the loan. If there is no in-house program to provide such aid, look to the federal government. Through the Department of Housing and Urban Renewal (HUD) there are plans that can help struggling homeowners.

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