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With the ongoing economic downturn, more and more homes and properties face foreclosure over the past year or two than ever before. Besides the poor economy overall, the biggest factor is the sub-prime lending spree of the past few years that created ballooning payments and allowed people to enter into mortgages that they couldn’t manage and shouldn’t have been given.

When a home is foreclosed on, it means that the bank or lender has obtained a court order terminating the loan agreement and can take possession of the property back from the signer. This would be the bank that underwrote the original loan or mortgage agreement.

When someone takes out a home loan or mortgage, the bank or lender gets a security interest from the borrower, in essence pledging the house or property as security for the loan. If they default on the payment terms, the bank or lender can try to repossess, or foreclose on the property.

Failing to pay the mortgage note or loan payment is only one possible reason for foreclosure. Other problems such as overdue property tax that isn’t paid, overdue HOA dues or assessments, even unpaid contractor bills can be cause for a foreclosure action.

For a residential mortgage loan, the actual process of foreclosure proceeding can begin after the owner has failed to meet the mortgage agreement terms. Then the bank or creditor may look to take possession of the property so that they can recover their principle by reselling the property.

In foreclosure, the lender can opt to try and sell the property and keep the proceeds to pay off its mortgage and any legal costs. When this happens, this is considered as a lender foreclosing on the mortgage or loan. While there are some legal remedies, it is obviously much better to avoid going into foreclosure to begin with. Though it seems the real estate market has begun to rebound, or at least stopped it’s deadly downward spiral, the number of loan defaults is still very, very high.

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Related posts:

1. The Foreclosure Process
2. How You Can Stop Foreclosure Right Now
3. Loan Modification Process – The Top 5 Questions And Answers
4. How To Get Help Before Foreclosure
5. How To Avoid Foreclosure Of Your Home
6. New Law Protects Tenants from Foreclosure
7. 10 Ways To Delay Foreclosure
8. Protecting Tenants in Foreclosure
9. Mortgage Modification 101
10. Can You Stop Foreclosure With Bankruptcy?