Foreclosure is a legal procedure whereby property pledged as
security for a debt is sold to pay the debt in the event of default in
terms of payment/s. When a person fails to make timely payments on a
property which is mortgaged as security, the bank or any other financial
creditor may sell the said property to recover the default amount.

Home Foreclosures are of three types:

• Strict home foreclosure
• Judicial home foreclosure
• Non-judicial home foreclosure (foreclosure by power of sale)

The original method of foreclosure was strict
foreclosure. Under this method, when the homeowner fails to pay the
loan, the bank or financial creditor gains the mortgaged property
automatically without selling it within a certain period of time. But
now it is available in few places only.

The widely used methods of
home foreclosures are foreclosure by judicial and non-judicial home
foreclosure. In foreclosure by judicial, entire processes are carried
out under the supervision of a court. Here the sale of the mortgaged
property is done in a short trial by pleadings and various judicial
decisions.

But a non-judicial foreclosure does not involve court
supervision. It is also known as foreclosure by power of sale. Here an
agreement is formed in which either the homeowner can stop home
foreclosure by paying back the amount or the payments can be delayed for
sometime subject to prior consent of both parties in question, that is
borrower and lender.

A home foreclosure occurs when the borrower
fails to pay the mortgage expenses and the lender or the banker decides
to execute the terms of the mortgage to recover his loss by putting the
borrower’s house for sale. When the borrower fails to pay the due then
all the power and the control of his home goes in the hand of the lender
or the banker who had given him loan, then the mortgage company or the
bank, to get back his balance amount forces to put the borrower’s home
for public sale through auction. There are many ways how a borrower or
the homeowner can be safe of home foreclosure.

Losing a home is
devastating both financially and emotionally for any individual. Due to a
major increase in unemployment and housing boom, foreclosures have been
raised by almost 50% within the last year.

Banks, lenders,
government and different financial institutions are all trying to help
homeowners to save their property and rectify the problem by introducing
different plans for those in a state of serious financial
inconvenience.

Following are the plans:

• Loan workout plan- In this plan, a deadline is provided so that the homeowner gets sufficient time to pay off the debt.
• A 12 to 24 months long repayment plan is there for the unemployed.
  However, an additional interest is charged in this case apart from the
  actual loan amount.
• A maximum of 18 months suspension of payments can be extended to those who have excellent track record in bill payment.

Home foreclosure can be avoided in the following ways:

• A pre-planned budget should be laid out in accordance with the current salary of the potential buyer.
• Save at every opportunity.
• As you receive your salary, set aside the monthly payable amount for the mortgage.
• Consistency in payment should be maintained in order to avoid payment defaults.
• There are various sites offering information on foreclosures, always go through it before buying a house.
• Once your home is declared in the foreclosure name list, sell the property immediately to avoid home foreclosure.

Although foreclosure is the worst possible situation for a
homeowner, it is also a golden opportunity for those who are interested
to buy foreclosed properties either as an investment or simply to buy a
house. The reason being, that these homes are available at low costs at
desirable rates of payment.

To find a foreclosed property is not
hard, just browse online and go through the declared list of the
foreclosure properties. The up-to-date data will provide you with
detailed information about the offers. These properties can be available
in two ways, either through auction or before the auction, i.e. by
checking the list of the owners from online and convince them personally
to sell. This way there is a high probability of getting the house at
lower rates than usual.

Home foreclosure is an expensive process.
Sometimes lenders also sell the property at a loss to avoid foreclosure.
Thus from a foreclosed property, one can make a great start investing
in Real Estate.