Foreclosure is a legal process in which a lender sells your property to recover its losses, including the balance of the loan and costs of collecting the debt and foreclosing on the property. Foreclosure can occur for any of the following reasons:
The lender may sell the property at a public auction to recover its losses. In some cases, the lender will take ownership of the property if another buyer does not bid above a certain amount.
If the foreclosure goes forward without an alternate solution, the legal process varies from state to state, but follows two basic processes — judicial and non-judicial foreclosure. A judicial foreclosure is handled as a civil lawsuit and is conducted entirely under the supervision of the court, while a non-judicial foreclosure takes place without any formal court proceedings.
Non judicial process:
If you want to stay in your home, and you have received notification of foreclosure proceedings, you need to contact your lender to see if you qualify for refinancing or other loan modifications. Loan modifications can be risky, be sure you do research before you commit to any loan modification.
If you desire to leave your home, you may have these options:
The goal of a short sale is to help you avoid foreclosure if you’re no longer able to remain in your house. In the short sale process, you sell your house and settle your mortgage debt for less than the amount that you owe.
This option lets you avoid going through the foreclosure process by signing the deed to your property over to your lender. A deed in lieu can negatively affect your credit score, but the impact is generally less severe than a foreclosure.
These are hard to find, but occasionally you can find a private investor who will buy your home for the amount owed.