Mortgage Foreclosure | How To Avoid California Home Foreclosures
Mortgage foreclosure is a legal action where the bank or other type of creditor repossesses and resells a house or other property due to the property owner’s failure to abide by the mortgage agreement. This is often referred to as a “default in payment of a promissory note” that was secured by the borrower’s property. After the legal process is finished, the lender has officially foreclosed its mortgage.
More On Mortgage Foreclosures
Typically, there are two types of foreclosure in the United States. First, in what is known as a “deed in lieu of foreclosure,” the bank simply claims the property as its own possession as a substitute for debt payments. In most cases however, the property is turned over to a county sheriff who puts it up for auction. The latter is more popular among states such as California in case the property is worth a lot more than the debt owed by the owner. The highest bidder is granted title to the property, and often the winner of the auction is the bank who initialized the foreclosure. If this happens, the lender is awarded title to the property.
The Future of Foreclosure Listings
It is true that there is an upward trend of people having to foreclose on their property, as this number has increased 72% in the past year. The states where foreclosure is highest are Georgia, Florida, Texas and Colorado, respectively, although California foreclosure listings are expected to increase in years to come with rising interest rates.
How to Avoid Foreclosure
As a borrower, if you find that you are in a similar position, there are a few things to keep in mind. First, it is wise to talk with your mortgage lender or banking institution and explain your current financial situation so as to evoke sympathy. If you are lucky, your lender may be willing to modify the current mortgage loan agreement in a way that is beneficial to you. Second, you may want to look into having your property appraised. If its value has gone up, selling it may get you some extra cash. If it comes down to it, you could also take a home equity loan out against the property. This is only an option if your current financial quandary is temporary. You do not want to take out another loan if you won’t be able to pay it back.
Finally, be aware of scams and deceptions. The home foreclosure process attracts many scam artists just waiting to buy your property off of you with a promise that you will later be able to rent it back. Once you are ready to rent, the new owners refuse you the right and you are left homeless with nothing to do about it. Be cautious. Do your homework.