Friday, April 30, 2010

How Properties Get Into House Foreclosure Listings By Joseph B. Smith

To understand how a property gets included in house foreclosure listings, a homeowner should first learn what foreclosure really is. Knowing all about it can help them take necessary measures to prevent their homes from being foreclosed.
Steps involved

The process of foreclosure starts when homeowners fail to fulfill the requirements stipulated in the contract between them and their lenders. A homeowner who defaults on mortgage loan payments can find their property taken over by the lender and sold at a property auction.

This does not mean though, that once a homeowner is delayed in paying the loan, the ownership of the property will automatically revert to the lender. There are specific periods before a home is repossessed if the owner is late in paying for the loans.

The time provided to homeowners before their properties are foreclosed varies from contract to contract and are governed by different laws that differ from one state to another.
Options for borrowers

There are several ways by which homeowners can prevent their homes from getting foreclosed. Two of the more common ways are short sales and refinancing. A short sale is when a bank or a lender allows the homeowner to sell the property for a price that is less than its real market value, just to prevent it from being included in the bank's house foreclosure listings.

Refinancing, on the other hand, is the process by which a homeowner facing foreclosure troubles acquires another debt obligation carrying different terms to replace the existing one. If the acquisition of the replacement debt obligation is categorized under financial distress, then it is called debt restructuring.

Aside from these two common methods, there are other ways by which a homeowner or borrower can prevent foreclosure. These methods include temporary arrangements that they can have with their lenders, bankruptcy filing and alternate financing.

Homeowners can also contest a foreclosure. They can challenge the debt's validity to prevent the property from being foreclosed. They also have the option to sue the lender or bank for damages. In most foreclosure suits, the burden of proof is usually on the side of the lender who needs to produce evidence that they have the right to foreclose the property in question.

Residential properties do not get included in house foreclosure listings just because a homeowner was delayed in paying the loans. There are several processes involved and numerous options available to borrowers before the property is taken over by the mortgage holder.