Foreclosure Help- Recognizing Issues
“Working together to help neighbors recover”
Definitions
Foreclosure. The
legal process by which an owner’s right to a property is terminated,
usually due to default. The mortgage lender sells at auction the
property that secures the loan on which a borrower has defaulted.
Typically, ownership of the property is transferred to the
financial institution. The institution will market and list for
sale the property to recover the monies owed to them.
Deed-in-Lieu of Foreclosure.The
borrower transfers the property to the servicer if the home cannot be
sold at
market value. This option requires that the property be listed for a
specified period of time, generally 90 days. There may be tax
consequences.
Short Sale. If the market value is less than total amount owed, a short sale allows the borrower to sell the home and
use the proceeds to pay the mortgage even though the proceeds will
not be sufficient to pay off the outstanding balance. The investor,
mortgage insurer and any additional lien holders, ie. second mortgage,
home equity line of credit, must agree to this option.