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Foreclosure is a legal process in which a
lender A creditor or lender is a party (e.g., person, organization, company, or government) that has a claim on the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property ...
attempts to recover the balance of a loan from a borrower who has stopped making payments to the lender by forcing the sale of the
asset In financial accounting, an asset is any resource owned or controlled by a business or an economic entity. It is anything (tangible or intangible) that can be used to produce positive economic value. Assets represent value of ownership that can b ...
used as the collateral for the loan. Formally, a mortgage lender (mortgagee), or other
lienholder A lien ( or ) is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the ''lienee'' and the pers ...
, obtains a termination of a mortgage borrower (mortgagor)'s equitable right of redemption, either by court order or by operation of law (after following a specific statutory procedure). Usually a lender obtains a
security interest In finance, a security interest is a legal right granted by a debtor to a creditor over the debtor's property (usually referred to as the '' collateral'') which enables the creditor to have recourse to the property if the debtor defaults in mak ...
from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt. While this equitable right exists, it is a cloud on title and the lender cannot be sure that they can repossess the property. Therefore, through the process of foreclosure, the lender seeks to immediately terminate the equitable right of redemption and take both legal and equitable title to the property in
fee simple In English law, a fee simple or fee simple absolute is an estate in land, a form of freehold ownership. A "fee" is a vested, inheritable, present possessory interest in land. A "fee simple" is real property held without limit of time (i.e., per ...
. Other lien holders can also foreclose the owner's right of redemption for other debts, such as for overdue taxes, unpaid contractors' bills or overdue
homeowner association A homeowner association (or homeowners' association, abbreviated HOA, sometimes referred to as a property owners' association or POA), or a homeowner community, is a private association-like entity often formed either '' ipso jure'' in a building ...
dues or assessments. The foreclosure process as applied to residential mortgage loans is a bank or other secured creditor selling or repossessing a parcel of
real property In English common law, real property, real estate, immovable property or, solely in the US and Canada, realty, is land which is the property of some person and all structures (also called improvements or fixtures) integrated with or affixe ...
after the owner has failed to comply with an agreement between the lender and borrower called a "
mortgage A mortgage loan or simply mortgage (), in civil law jurisdicions known also as a hypothec loan, is a loan used either by purchasers of real property to raise funds to buy real estate, or by existing property owners to raise funds for any p ...
" or " deed of trust". Commonly, the violation of the mortgage is a
default Default may refer to: Law * Default (law), the failure to do something required by law ** Default (finance), failure to satisfy the terms of a loan obligation or failure to pay back a loan ** Default judgment, a binding judgment in favor of ei ...
in payment of a promissory note, secured by a
lien A lien ( or ) is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the ''lienee'' and the pers ...
on the property. When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that "the lender has foreclosed its mortgage or
lien A lien ( or ) is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the ''lienee'' and the pers ...
". If the promissory note was made with a recourse clause and if the sale does not bring enough to pay the existing balance of principal and fees, then the mortgagee can file a claim for a
deficiency judgment A deficiency judgment is an unsecured money judgment against a borrower whose mortgage foreclosure sale did not produce sufficient funds to pay the underlying promissory note, or loan, in full. The availability of a deficiency judgment depends on ...
. In many states in the United States, items included to calculate the amount of a deficiency judgment include the loan principal, accrued interest and attorney fees less the amount the lender bid at the foreclosure sale.


Types

The mortgage holder can usually initiate foreclosure at a time specified in the mortgage documents, typically some period of time after a default condition occurs. In the United States, Canada and many other countries, several types of foreclosure exist. In the US for example, two of themnamely, by judicial sale and by power of saleare widely used, but other modes are possible in a few other U.S. states.


Judicial

''Foreclosure by judicial sale,'' commonly called ''judicial foreclosure'', involves the sale of the mortgaged property under the supervision of a court. The proceeds go first to satisfy the mortgage, then other lien holders, and finally the mortgagor/borrower if any proceeds are left. Judicial foreclosure is available in every US state and required in many (Florida requires judicial foreclosure). The lender initiates judicial foreclosure by filing a
lawsuit - A lawsuit is a proceeding by a party or parties against another in the civil court of law. The archaic term "suit in law" is found in only a small number of laws still in effect today. The term "lawsuit" is used in reference to a civil act ...
against the borrower. As with all other legal actions, all parties must be notified of the foreclosure, but notification requirements vary significantly from state to state in the US. A judicial decision is announced after the exchange of pleadings at a (usually short) hearing in a state or local court in the US. In some rather rare instances, foreclosures are filed in US federal courts. A
judicial officer The judiciary (also known as the judicial system, judicature, judicial branch, judiciative branch, and court or judiciary system) is the system of courts that adjudicates legal disputes/disagreements and interprets, defends, and applies the law ...
supervises the sale and executes the legal papers and deed if any. This may be done by a
superior court In common law systems, a superior court is a court of general jurisdiction over civil and criminal legal cases. A superior court is "superior" in relation to a court with limited jurisdiction (see small claims court), which is restricted to civil ...
judge or a referee specially appointed by a court of judicial privacy.


Nonjudicial

''Foreclosure by power of sale,'' also called ''nonjudicial foreclosure'', and is authorized by many states if a ''power of sale'' clause is included in the mortgage or if a deed of trust with such a clause was used, instead of an actual mortgage. In some US states, like California and
Texas Texas (, ; Spanish: ''Texas'', ''Tejas'') is a state in the South Central region of the United States. At 268,596 square miles (695,662 km2), and with more than 29.1 million residents in 2020, it is the second-largest U.S. state by b ...
, nearly all so-called mortgages are actually deeds of trust. This process involves the sale of the property by the mortgage holder without court supervision (as elaborated upon below). This process is generally much faster and cheaper than foreclosure by judicial sale. As in judicial sale, the mortgage holder and other lien holders are respectively first and second claimants to the proceeds from the sale.


Strict

Other types of foreclosure are considered minor because of their limited availability. Under ''strict foreclosure'', which is available in a few states including Connecticut, New Hampshire and Vermont, if the mortgagee wins the court case, the court orders the defaulted mortgagor to pay the mortgage within a specified period of time. Should the mortgagor fail to do so, the mortgage holder gains the title to the property with no obligation to sell it. This type of foreclosure is generally available only when the value of the property is less than the debt (" under water"). Historically, strict foreclosure was the original method of foreclosure.


Acceleration

Acceleration is a clause that is usually found in Sections 16, 17, or 18 of a typical mortgage in the US. Not all accelerations are the same for each mortgage, as it depends on the terms and conditions between lender and obligated mortgagor(s). When a term in the mortgage has been broken, the acceleration clause goes into effect. It can declare the entire payable debt to the lender if the borrower(s) were to transfer the title at a future date to a purchaser. The clause in the mortgage also instructs that a notice of acceleration must be served to the obligated mortgagor(s) who signed the Note. Each mortgage gives a time period for the debtor(s) to cure their loan. The most common time periods allot to debtor(s) is usually 30 days, but for commercial property it can be 10 days. The notice of acceleration is called a Demand and/or Breach Letter. In the letter it informs the Borrower(s) that they have 10 or 30 days from the date on the letter to reinstate their loan. Demand/Breach letters are sent out by Certified and Regular mail to all notable addresses of the Borrower(s). Also in the acceleration of the mortgage the lender must provide a payoff quote that is estimated 30 days from the date of the letter. This letter is called an FDCPA (Fair Debt Collections Practices Acts) letter and/or Initial Communication Letter. Once the Borrower(s) receives the two letters providing a time period to reinstate or pay off their loan the lender must wait until that time expires in to take further action. When the 10 or 30 days have passed that means that the acceleration has expired and the Lender can move forward with foreclosing on the property. The lender will also include any unpaid property taxes and delinquent payments in this amount, so if the borrower does not have significant equity they will owe more than the original amount of the mortgage. Lenders may also accelerate a loan if there is a transfer clause, obligating the mortgagor to notify the lender of any transfer, whether; a lease-option, lease-hold of 3 years or more, land contracts, agreement for deed, transfer of title or interest in the property. The vast majority (but not all) of mortgages today have acceleration clauses. The holder of a mortgage without this clause has only two options: either to wait until all of the payments come due or convince a court to compel a sale of some parts of the property in lieu of the past due payments. Alternatively, the court may order the property sold subject to the mortgage, with the proceeds from the sale going to the payments owed the mortgage holder.


Process

The process of foreclosure can be rapid or lengthy and varies from state to state. Other options such as
refinancing Refinancing is the replacement of an existing debt obligation with another debt obligation under a different term and interest rate. The terms and conditions of refinancing may vary widely by country, province, or state, based on several economic ...
, a short sale, alternate financing, temporary arrangements with the lender, or even
bankruptcy Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debto ...
may present homeowners with ways to avoid foreclosure. Websites which can connect individual borrowers and homeowners to lenders are increasingly offered as mechanisms to bypass traditional lenders while meeting payment obligations for mortgage providers. Although there are slight differences between the states, the foreclosure process generally follows a timeline beginning with initial missed payments, moving to a sale being scheduled and finally a redemption period (if available).


Strict and judicial

In the
United States The United States of America (U.S.A. or USA), commonly known as the United States (U.S. or US) or America, is a country primarily located in North America. It consists of 50 states, a federal district, five major unincorporated territo ...
, there are two types of foreclosure in most states described by common law. Using a "
deed in lieu of foreclosure A deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings. The de ...
," or " strict foreclosure", the noteholder claims the
title A title is one or more words used before or after a person's name, in certain contexts. It may signify either generation, an official position, or a professional or academic qualification. In some languages, titles may be inserted between the f ...
and possession of the property back in full satisfaction of a debt, usually on contract. In the proceeding simply known as foreclosure (or, perhaps, distinguished as "judicial foreclosure"), the lender must sue the defaulting borrower in state court. Upon final judgment (usually
summary judgment In law, a summary judgment (also judgment as a matter of law or summary disposition) is a judgment entered by a court for one party and against another party summarily, i.e., without a full trial. Summary judgments may be issued on the merits of a ...
) in the lender's favor, the property is subject to
auction An auction is usually a process of buying and selling goods or services by offering them up for bids, taking bids, and then selling the item to the highest bidder or buying the item from the lowest bidder. Some exceptions to this definition ex ...
by the county
sheriff A sheriff is a government official, with varying duties, existing in some countries with historical ties to England where the office originated. There is an analogous, although independently developed, office in Iceland that is commonly transl ...
or some other officer of the court. Many states require this sort of proceeding in some or all cases of foreclosure to protect any equity the debtor may have in the property, in case the value of the debt being foreclosed on is substantially less than the market value of the real property; this also discourages a strategic foreclosure by a lender who wants to obtain the property. In this foreclosure, the sheriff then issues a deed to the winning bidder at auction. Banks and other institutional lenders may bid in the amount of the owed debt at the sale but there are a number of other factors that may influence the bid, and if no other buyers step forward the lender receives title to the real property in return.


Nonjudicial

Historically, the vast majority of judicial foreclosures have been unopposed, since most defaulting borrowers have no money to hire counsel. Therefore, the U.S. financial services industry has lobbied since the mid-19th century for faster foreclosure procedures that would not clog up state courts with uncontested cases, and would lower the cost of credit (because it must always have the cost of recovering collateral built-in). Lenders have also argued that taking foreclosures out of the courts is actually kinder and less traumatic to defaulting borrowers, as it avoids the ''
in terrorem IN, In or in may refer to: Places * India (country code IN) * Indiana, United States (postal code IN) * Ingolstadt, Germany (license plate code IN) * In, Russia, a town in the Jewish Autonomous Oblast Businesses and organizations * Indepe ...
'' effects of being sued. In response, a slight majority of U.S. states have adopted nonjudicial foreclosure procedures in which the mortgagee (or more commonly the mortgagee's servicer's attorney, designated agent, or trustee) gives the debtor a notice of default (NOD) and the mortgagee's intent to sell the real property in a form prescribed by state
statute A statute is a formal written enactment of a legislative authority that governs the legal entities of a city, state, or country by way of consent. Typically, statutes command or prohibit something, or declare policy. Statutes are rules made by l ...
; the NOD in some states must also be recorded against the property. This type of foreclosure is commonly called "statutory" or "nonjudicial" foreclosure, as opposed to "judicial", because the mortgagee does not need to file an actual lawsuit to initiate the foreclosure. A few states impose additional procedural requirements such as having documents stamped by a court clerk; Colorado requires the use of a county "public trustee," a government official, rather than a private trustee specializing in carrying out foreclosures. However, in most states, the ''only'' government official involved in a nonjudicial foreclosure is the county recorder, who merely records any pre-sale notices and the trustee's deed upon sale. In this "power-of-sale" type of foreclosure, if the debtor fails to cure the default, or use other lawful means (such as filing for
bankruptcy Bankruptcy is a legal process through which people or other entities who cannot repay debts to creditors may seek relief from some or all of their debts. In most jurisdictions, bankruptcy is imposed by a court order, often initiated by the debto ...
to temporarily stay the foreclosure) to stop the sale, the mortgagee or its representative conduct a
public auction In public relations and communication science, publics are groups of individual people, and the public (a.k.a. the general public) is the totality of such groupings. This is a different concept to the sociological concept of the ''Öffentlichkei ...
in a manner similar to the sheriff's auction. Notably, the lender ''itself'' can bid for the property at the auction, and is the ''only'' bidder that can make a "credit bid" (a bid based on the outstanding debt itself) while all other bidders must be able to immediately (or within a very short period of time) present the auctioneer with cash or a cash equivalent like a cashier's check. In May 2012, the
U.S. Supreme Court The Supreme Court of the United States (SCOTUS) is the highest court in the federal judiciary of the United States. It has ultimate appellate jurisdiction over all U.S. federal court cases, and over state court cases that involve a point o ...
, resolved uncertainty surrounding a secured creditor's right to credit bid in a sale under a
Chapter 11 Chapter 11 of the United States Bankruptcy Code ( Title 11 of the United States Code) permits reorganization under the bankruptcy laws of the United States. Such reorganization, known as Chapter 11 bankruptcy, is available to every business, whet ...
bankruptcy plan. In RadLAX Gateway Hotel, LLC v. Amalgamated Bank, 566 U.S. ______ (2012), the Court found it was obligated to interpret the bankruptcy code “clearly and predictably using well established principles of statutory construction” resolving the lingering uncertainties of credit bidding under a chapter 11 plan and upholding secured creditors’ rights. The highest bidder at the auction becomes the owner of the real property, free and clear of interest of the former owner, but possibly encumbered by liens superior to the foreclosed mortgage (e.g., a senior mortgage, unpaid property taxes, weed/demolition liens). Further legal action, such as an
eviction Eviction is the removal of a tenant from rental property by the landlord. In some jurisdictions it may also involve the removal of persons from premises that were foreclosed by a mortgagee (often, the prior owners who defaulted on a mort ...
, may be necessary to obtain possession of the premises if the former occupant fails to voluntarily vacate.


Defenses

In some US states, particularly those where only judicial foreclosure is available, the constitutional issue of
due process Due process of law is application by state of all legal rules and principles pertaining to the case so all legal rights that are owed to the person are respected. Due process balances the power of law of the land and protects the individual per ...
has affected the ability of some lenders to foreclose. In Ohio, the US federal district court for the Northern District of Ohio has dismissed numerous foreclosure actions by lenders because of the inability of the alleged lender to prove that they are the real party in interest. The same happened in a Colorado district court case in June 2008. In contrast, in six federal judicial circuits and the majority of nonjudicial foreclosure states (like California), due process has already been judicially determined to be a frivolous defense. The entire point of nonjudicial foreclosure is that there is no
state actor In United States constitutional law, a state actor is a person who is acting on behalf of a governmental body, and is therefore subject to limitations imposed on government by the United States Constitution, including the First, Fifth, and Four ...
(i.e., a court) involved.''Garfinkle v. Superior Court''
21 Cal. 3d 268
(1978). This was a decision of the
Supreme Court of California The Supreme Court of California is the highest and final court of appeals in the courts of the U.S. state of California. It is headquartered in San Francisco at the Earl Warren Building, but it regularly holds sessions in Los Angeles and Sac ...
in favor of
Wells Fargo Wells Fargo & Company is an American multinational financial services company with corporate headquarters in San Francisco, California; operational headquarters in Manhattan; and managerial offices throughout the United States and inter ...
.
The constitutional right of due process protects people only from violations of their civil rights by state actors, not private actors. (The involvement of the county clerk or recorder in recording the necessary documents has been held to be insufficient to invoke due process, since they are required by statute to record all documents presented that meet minimum formatting requirements and are denied the discretion to decide whether a particular foreclosure should proceed.) A further rationale is that under the principle of
freedom of contract Freedom of contract is the process in which individuals and groups form contracts without government restrictions. This is opposed to government regulations such as minimum-wage laws, competition laws, economic sanctions, restrictions on pri ...
, if debtors wish to enjoy the additional protection of the formalities of judicial foreclosure, it is their burden to find a lender willing to provide a loan secured by a traditional conventional mortgage instead of a deed of trust with a power of sale. Courts have also rejected as frivolous the argument that the mere legislative act of authorizing or regulating the nonjudicial foreclosure process thereby transforms the process itself into state action. In turn, since there is no right to due process in nonjudicial foreclosure, it has been held that it is irrelevant whether the borrower had actual notice (i.e., subjective awareness) of the foreclosure, as long as the foreclosure trustee performed the tasks prescribed by statute in an attempt to give notice.


Equitable foreclosure

"Strict foreclosure" available in some states is an equitable right of the foreclosure sale purchaser. The purchaser must petition a court for a decree that cancels any junior lien holder's rights to the senior debt. If the junior lien holder fails to object within the judicially established time frame, his lien is canceled and the purchaser's title is cleared. This effect is the same as the strict foreclosure that occurred in English common law of equity as a response to the development of the
equity of redemption The equity of redemption refers to the right of a mortgagor to redeem his or her property once the debt secured by the mortgage has been discharged. Overview Historically, a mortgagor (the borrower) and a mortgagee (the lender) executed a conveyanc ...
.


Title search and tax lien issues

In most jurisdictions, it is customary for the foreclosing lender to obtain a
title search In real estate business and law, a title search or property title search is the process of examining public records and retrieving documents on the history of a piece of real property to determine and confirm property's legal ownership, and find o ...
of the real property and to notify all other persons who may have
lien A lien ( or ) is a form of security interest granted over an item of property to secure the payment of a debt or performance of some other obligation. The owner of the property, who grants the lien, is referred to as the ''lienee'' and the pers ...
s on the property, whether by
judgment Judgement (or US spelling judgment) is also known as ''adjudication'', which means the evaluation of evidence to make a decision. Judgement is also the ability to make considered decisions. The term has at least five distinct uses. Aristotle ...
, by contract, or by
statute A statute is a formal written enactment of a legislative authority that governs the legal entities of a city, state, or country by way of consent. Typically, statutes command or prohibit something, or declare policy. Statutes are rules made by l ...
or other law, so that they may appear and assert their interest in the foreclosure litigation. This is accomplished through the filing of a ''
lis pendens In United States law, a (Latin for 'suit pending' ) is a written notice that a lawsuit has been filed concerning real estate, involving either the title to the property or a claimed ownership interest in it. The notice is usually filed in the c ...
'' as part of the lawsuit and recordation of it in order to provide public notice of the pendency of the foreclosure action. In all U.S. jurisdictions, a lender who conducts a foreclosure sale of real property that has a federal tax lien must give 25 days notice of the sale to the
Internal Revenue Service The Internal Revenue Service (IRS) is the revenue service for the United States federal government, which is responsible for collecting U.S. federal taxes and administering the Internal Revenue Code, the main body of the federal statutory tax ...
. Failure to give notice results in the lien remaining attached to the real property after the sale. Therefore, it is imperative the lender search local federal tax liens, so that if parties to the foreclosure have a federal tax lien filed against them, the proper notice to the IRS is given. A detailed explanation by the IRS of the federal tax lien process can be found.


Contesting a foreclosure

Because the right of redemption is an equitable right, foreclosure is an action in equity. To keep the right of redemption, the debtor may be able to petition the court for an injunction. If repossession is imminent, the debtor must seek a temporary restraining order. However, the debtor may have to post a bond in the amount of the debt. This protects the creditor if the attempt to stop foreclosure is simply an attempt to escape the debt. A debtor may also challenge the validity of the debt in a claim against the bank to stop the foreclosure and sue for damages. In a foreclosure proceeding, the lender also bears the burden of proving they have standing to foreclose. Several U.S. states, including California, Georgia, and Texas impose a "tender" condition precedent upon borrowers seeking to challenge a wrongful foreclosure, which is rooted in the maxim of equity principle that "he who seeks equity must first do equity", as well as the common law rule that the party seeking rescission of a contract must first return all benefits received under the contract. In other words, to challenge an allegedly wrongful foreclosure, the borrower must make
legal tender Legal tender is a form of money that courts of law are required to recognize as satisfactory payment for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything which when offered ("tendered") in pa ...
of the ''entire'' remaining balance of the debt prior to the foreclosure sale. California has one of the strictest forms of this rule, in that the funds must be ''received'' by the lender before the sale. One tender attempt was held inadequate when the check arrived via
FedEx FedEx Corporation, formerly Federal Express Corporation and later FDX Corporation, is an American multinational conglomerate holding company focused on transportation, e-commerce and business services based in Memphis, Tennessee. The name "Fe ...
on a Monday, three days after the foreclosure sale had already occurred on Friday. At least one textbook has attacked the paradox inherent in the tender rule—namely, if the borrower actually had enough cash to promptly pay the entire balance, they would have already paid it off and the lender would not be trying to foreclose upon them in the first place—but it continues to be the law in the aforementioned states. Occasionally, borrowers have raised enough cash at the last minute (usually through desperate
fire sale A fire sale is the sale of goods at extremely discounted prices. The term originated in reference to the sale of goods at a heavy discount due to fire damage. It may or may not be defined as a closeout, the final sale of goods to zero inventory ...
s of other unencumbered assets) to offer good tender and have thereby preserved their rights to challenge the foreclosure process. Courts have been unsympathetic to attempts by such borrowers to recover fire sale losses from foreclosing lenders. One noteworthy court case questions the legality of the foreclosure practice is sometimes cited as proof of various claims regarding lending. In the case '' First National Bank of Montgomery v. Jerome Daly'', Jerome Daly claimed that the bank did not offer a legal form of
consideration Consideration is a concept of English common law and is a necessity for simple contracts but not for special contracts (contracts by deed). The concept has been adopted by other common law jurisdictions. The court in '' Currie v Misa'' declare ...
because the money loaned to him was created upon signing of the loan contract. The myth reports that Daly won, did not have to repay the loan, and the bank could not repossess his property. In fact, the "ruling" (widely referred to as the "Credit River Decision") was ruled a nullity by the courts. In a recent New York case, the Court rejected a lender's attempt to foreclose on summary judgment because the lender failed to submit proper affidavits and papers in support of its foreclosure action and also, the papers and affidavits that were submitted were not prepared in the ordinary course of business. Many borrowers' attorneys will establish a lender proof of compliance with the 90-day pre-foreclosure notice requirement in order to delay and prolong forecosure proceedings giving the borrower an extra 3 months to clean their record and pay off debt.


Foreclosure auction

When the entity (in the US, typically a county sheriff or designee) auctions a foreclosed property the noteholder may set the starting price as the remaining balance on the mortgage loan. However, there are a number of issues that affect how pricing for properties is considered, including bankruptcy rulings. In a weak market, the foreclosing party may set the starting price at a lower amount if it believes the real estate securing the loan is worth less than the remaining principal of the loan. Time from notice of foreclosures to actual property sales depends on many factors, such as the method of foreclosure (judicial or non-judicial). When the remaining mortgage balance is higher than the actual home value, the foreclosing party is unlikely to attract auction bids at this price level. A house that has gone through a foreclosure auction and failed to attract any acceptable bids may remain the property of the owner of the mortgage. That inventory is called REO (real estate owned). In these situations, the owner/servicer tries to sell it through standard real estate channels.


Further borrower's obligations

The mortgagor may be required to pay for Private Mortgage Insurance, or PMI, for as long as the principal of his or her primary mortgage is above 80% of the value of his or her property. In most situations, insurance requirements guarantee that the lender gets back some pre-defined proportion of the loan value, either from foreclosure auction proceeds or from PMI or a combination of those. Nevertheless, in an illiquid real estate market or if real estate prices drop, the property being foreclosed could be sold for less than the remaining balance on the primary mortgage loan, and there may be no insurance to cover the loss. In this case, the court overseeing the foreclosure process may enter a
deficiency judgment A deficiency judgment is an unsecured money judgment against a borrower whose mortgage foreclosure sale did not produce sufficient funds to pay the underlying promissory note, or loan, in full. The availability of a deficiency judgment depends on ...
against the mortgagor. Deficiency judgments can be used to place a lien on the borrower's other property that obligates the mortgagor to repay the difference. It gives lender a legal right to collect the remainder of debt out of mortgagor's other assets (if any). There are exceptions to this rule. If the mortgage is a non-recourse debt (which is often the case with owner-occupied residential mortgages in the U.S.), lender may not go after borrower's assets to recoup his losses. Lender's ability to pursue deficiency judgment may be restricted by state laws. In California and some other US states, original mortgages (the ones taken out at the time of purchase) are typically non-recourse loans; however, refinanced loans and home equity lines of credit are not. If the lender chooses not to pursue deficiency judgment—or cannot because the mortgage is non-recourse—and accepts the loss, the borrower may have to pay income taxes on the unrepaid amount if it can be considered "forgiven debt". However, recent changes in tax laws may change the way these amounts are reported. Any liens resulting from other loans against the property being foreclosed (
second mortgage Second mortgages, commonly referred to as junior liens, are loans secured by a property in addition to the primary mortgage. Depending on the time at which the second mortgage is originated, the loan can be structured as either a standalone secon ...
s, HELOCs) are "wiped out" by foreclosure.


Renegotiation alternative

In the wake of the
United States housing bubble The 2000s United States housing bubble was a real-estate bubble affecting over half of the U.S. states. It was the impetus for the subprime mortgage crisis. Housing prices peaked in early 2006, started to decline in 2006 and 2007, and reac ...
and the subsequent
subprime mortgage crisis The United States subprime mortgage crisis was a multinational financial crisis that occurred between 2007 and 2010 that contributed to the 2007–2008 global financial crisis. It was triggered by a large decline in US home prices after the coll ...
there has been increased interest in renegotiation or modification of the mortgage loans rather than foreclosure, and some commentators have speculated that the crisis was exacerbated by the "unwillingness of lenders to renegotiate mortgages". Several policies, including the U.S. Treasury sponsored Hope Now initiative and the 2009 "Making Home Affordable" plan have offered incentives to renegotiate mortgages. Renegotiations can include lowering the principal due or temporarily reducing the interest rate. A 2009 study by Federal Reserve economists found that even using a broad definition of renegotiation, only 3% of "seriously delinquent borrowers" received a modification. The leading theory attributes the lack of renegotiation to securitization and a large number of claimants with
security interest In finance, a security interest is a legal right granted by a debtor to a creditor over the debtor's property (usually referred to as the '' collateral'') which enables the creditor to have recourse to the property if the debtor defaults in mak ...
in the mortgage. There is some support behind this theory, but an analysis of the data found that renegotiation rates were similar among unsecuritized and securitized mortgages. The authors of the analysis argue that banks don't typically renegotiate because they expect to make more money with a foreclosure, as renegotiation imposes "self-cure" and "redefault" risks.Adelino et al. (2009)
Why Don’t Lenders Renegotiate More Home Mortgages? Redefaults, Self-Cures, and Securitization
. Federal Reserve Bank of Boston Discussion Paper.
Government supported programs such as Home Affordable Refinance Program (HARP) may provide homeowners the ability to refinance their mortgages if they are unable to obtain a traditional refinance due to their declined home value. A dual-tracking process appeared to be in use by many lenders, however, where the lender would simultaneously talk to the borrower about a "loan modification", but also move ahead with a foreclosure sale of the borrower's property. Borrowers were heard to complain that they were misled by these practices and would often be "surprised" that their home had been sold at foreclosure auction, as they believed they were in a "loan modification process". California has enacted legislation to eliminate this type of "dual-tracking" – The Homeowner Bill of Rights – AB 278, SB 900, That went into effect on January 1, 2013.


Experiences of households post-foreclosure

A 2011 research paper by the
Federal Reserve Board The Board of Governors of the Federal Reserve System, commonly known as the Federal Reserve Board, is the main governing body of the Federal Reserve System. It is charged with overseeing the Federal Reserve Banks and with helping implement the mon ...
, “The Post-Foreclosure Experience of U.S. Households,” used credit reports from more than 37 million individuals between 1999 and 2010 to measure post-foreclosure behavior, especially in regard to future borrowing and housing consumption. The study found that: 1) On average 23% of people experiencing foreclosure had moved within a year of the foreclosure process starting. In the same time, a control group (not facing foreclosure) had only a 12% migration rate; 2) Only 30% of post-foreclosure borrowers moved to neighborhoods with median income at least 25% lower than their previous neighborhood; 3) The majority of post-foreclosure migrants do not end up in substantially less-desirable neighborhoods or more crowded living conditions; 4) There was no significant difference in household size between the post-foreclosure and control groups. However, only 17% of the post-foreclosure individuals had the same number and composition of household members after a foreclosure than before. By comparison, the control group maintained the same household companions in 46% of cases; and, 5) Only about 20% of post-foreclosure individuals chose to live in households where one person maintained a mortgage. Overall, the authors conclude that it is “difficult to say whether this small effect is because the shock that leads to foreclosure is not long-lasting, because the credit constraints imposed by having a foreclosure on one’s credit report are not large, or because housing services are more inelastic than other forms of consumption."


Affected demographics

Recent housing studies indicate that minority households disproportionately experience foreclosures. Other overly represented groups include African Americans, renter households, households with children, and foreign-born homeowners. For example, statistics show that African American buyers are 3.3 times more likely than white buyers to be in foreclosure, while Latino and Asian buyers are 2.5 and 1.6 times more likely, respectively. As another statistical example, over 60 per cent of the foreclosures that occurred in
New York City New York, often called New York City or NYC, is the most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the most densely populated major city in the Un ...
in 2007 involved rental properties. Twenty percent of the foreclosures nationwide were from rental properties. One reason for this is that the majority of these people have borrowed with risky subprime loans. There is a major lack of research done in this area posing problems for three reasons. One, not being able to describe who experiences foreclosure makes it challenging to develop policies and programs that can prevent/reduce this trend for the future. Second, researchers cannot tell the extent to which recent foreclosures have reversed the advances in
homeownership Owner-occupancy or home-ownership is a form of housing tenure in which a person, called the owner-occupier, owner-occupant, or home owner, owns the home in which they live. The home can be a house, such as a single-family house, an apartment, co ...
that some groups, historically lacking equal access, have made. Third, research is focused too much on community-level effects even though it is the individual households that are most strongly affected.Allen, R. Who Experiences Foreclosures? The Characteristics of Households Experiencing a Foreclosure in Minneapolis, Minnesota. Housing Studies, 26(6), 845–866. Many people cite their own or their family members medical conditions as the primary reason for undergoing a foreclosure. Many do not have
health insurance Health insurance or medical insurance (also known as medical aid in South Africa) is a type of insurance that covers the whole or a part of the risk of a person incurring medical expenses. As with other types of insurance, risk is shared among ma ...
and are unable to adequately provide for their medical needs. This again points to the fact that foreclosures affects already vulnerable populations.Pollack, C., & Lynch, J. (2009). Health Status of People Undergoing Foreclosure in the Philadelphia Region. American Journal of Public Health, 99(10), 1833–1839. Credit scores are greatly impacted after a foreclosure. The average number of points reduced when you are 30 days late on your mortgage payment is 40 – 110 points, 90 days late is 70 – 135 points, and a finalized foreclosure, short sale or deed-in-lieu is 85 – 160 points.


Recent trends

In 2009, the
United States Congress The United States Congress is the legislature of the federal government of the United States. It is bicameral, composed of a lower body, the House of Representatives, and an upper body, the Senate. It meets in the U.S. Capitol in Washin ...
tried to rescue the economy with a $700 billion bailout for the financial industry; however, there was a growing consensus that the deepening collapse of the housing market was at the heart of the country's acute economic downturn. After spending billions of dollars rescuing financial institutions only to see the economy spiral even deeper into crisis, both liberal and conservative economists and lawmakers pushed to redirect an economic stimulus bill to what they saw as the core problem: the housing market. But beneath the consensus over helping the housing market, there were huge differences over who should benefit under the competing plans. Democrats wanted to aim money directly at people in the greatest distress; and Republicans wanted to aim money at almost all homebuyers, on the theory that a rising tide would eventually lift all boats. In 2010, there was a 14% increase in the number of homes receiving a default notice between July and September. In that year one in every 45 homes received a foreclosure filing and the problem has become more widespread with the increasing rates of unemployment across the nation. Banks have become extremely aggressive without much patience for those who have fallen behind on their mortgage payments, and there are more families entering the foreclosure process sooner than ever. In 2011, banks were on track to repossess over 800,000 homes. In 2010, the highest rates of foreclosure filings were in
Las Vegas, Nevada Las Vegas (; Spanish for "The Meadows"), often known simply as Vegas, is the 25th-most populous city in the United States, the most populous city in the state of Nevada, and the county seat of Clark County. The city anchors the Las Vegas ...
;
Fort Myers, Florida Fort Myers (or Ft. Myers) is a city in southwestern Florida and the county seat and commercial center of Lee County, Florida, United States. The Census Bureau's Population Estimates Program calculated that the city's population was 92,245 in 20 ...
;
Modesto, California Modesto () is the county seat and largest city of Stanislaus County, California, United States. With a population of 218,464 at the 2020 census, it is the 19th largest city in the state of California and forms part of the Sacramento-Stockton ...
;
Scottsdale, Arizona , settlement_type = City , named_for = Winfield Scott , image_skyline = , image_seal = Seal of Scottsdale (Arizona).svg , image_blank_emblem = City of Scottsdale Script Logo.svg , nic ...
;
Miami, Florida Miami ( ), officially the City of Miami, known as "the 305", "The Magic City", and "Gateway to the Americas", is a coastal metropolis and the county seat of Miami-Dade County in South Florida, United States. With a population of 442,241 at th ...
; and
Ontario, California Ontario is a city in southwestern San Bernardino County in the U.S. state of California, east of downtown Los Angeles and west of downtown San Bernardino, the county seat. Located in the western part of the Inland Empire metropolitan area, ...
. The geographic diversity of these cities is made up for by the fact they these are all relatively metropolitan areas. Big cities like
Houston, Texas Houston (; ) is the most populous city in Texas, the most populous city in the Southern United States, the fourth-most populous city in the United States, and the sixth-most populous city in North America, with a population of 2,304,580 ...
saw a 26% increase in 2010, 23% in
Seattle, Washington Seattle ( ) is a seaport city on the West Coast of the United States. It is the seat of King County, Washington. With a 2020 population of 737,015, it is the largest city in both the state of Washington and the Pacific Northwest region of ...
and 21% in Atlanta, Georgia. These cities had the lowest rates of unemployment. On the opposite end of the spectrum, the cities with the lowest rates of foreclosure were Rome, NY; South Burlington, VT; Charleston, WV; Bryan, TX; and Tuscaloosa, AL. Not surprisingly, these areas had some of the highest nationwide rates of
unemployment Unemployment, according to the OECD (Organisation for Economic Co-operation and Development), is people above a specified age (usually 15) not being in paid employment or self-employment but currently available for Work (human activity), w ...
, helping to further demonstrate this correlation. A quote from RealtyTrac CEO James Saccacio summarizes the recent trends:
“Foreclosure floodwaters receded somewhat in 2010 in the nation’s hardest-hit housing markets. Even so, foreclosure levels remained five to 10 times higher than historic norms in most of those hard-hit markets, where deep fault-lines of risk remain and could potentially trigger more waves of foreclosure activity in 2011 and beyond.”
As per the foreclosure data report of RealtyTrac for January 2014, 1 in every 1,058 homes in U.S received a foreclosure filing. This figure falls in the higher spectrum of foreclosure frequency. As of August 2014, the foreclosure rate was 33.7%, 1.7% up from the last year. The rise in foreclosure activity has been most significant in New York and New Jersey, the two most densely populated areas in U.S. Closely following them is Florida.


Impact of foreclosure

The impact of foreclosure goes beyond just homeowners but also expands to towns and neighborhoods as a whole. Cities with high foreclosure rates often experience more crime and thefts with abandoned houses being broken into, garbage collecting on lawns, and an increase in prostitution.Associated Press. "Sharp Rise in Foreclosures as Banks Move in – Business – Real Estate – Msnbc.com." NBC News – Breaking News, Science and Tech News, World News, US News, Local News- NBC News. NBC News, 13 October 2011. Web. 4 December 2011. nbc news, business-real estate; Reviewed 3013-07-20 Foreclosures also impact neighboring housing sales on two levels—space and time. For any given time frame, foreclosures have a greater negative impact when they are closer to the property attempting to be sold. The conventional view suggested is that the increase in foreclosures will cause declines in the sales value of neighboring properties, which, in turn, will lead to an extension of the housing crisis. Another significant impact from increased foreclosure rates is on school mobility of children. In general, research suggests that switching schools is damaging for children, although this does significantly depend on the quality of the origin and destination schools. A study done in
New York City New York, often called New York City or NYC, is the most populous city in the United States. With a 2020 population of 8,804,190 distributed over , New York City is also the most densely populated major city in the Un ...
revealed that students who changed schools most often entered a school with lower, on average,
test scores A test score is a piece of information, usually a number, that conveys the performance of an examinee on a test. One formal definition is that it is "a summary of the evidence contained in an examinee's responses to the items of a test that are r ...
and overall school performance. The effect of these moves on academic performance for individual students requires further research. Foreclosures also have an emotional and physical effect on people. In one particular study of 250 recruited participants who had experienced foreclosure, 36.7% met screening criteria for
major depression Major depressive disorder (MDD), also known as clinical depression, is a mental disorder characterized by at least two weeks of pervasive low mood, low self-esteem, and loss of interest or pleasure in normally enjoyable activities. Introd ...
.


By country


Australia and New Zealand

Foreclosure has been prohibited by law in New Zealand for well over a century. Instead the mortgagee realises the security through sale, the exercise of the power of sale also being regulated by statute. In both of these countries statutory reform has altered the manner in which real property dealings are conducted. What is termed a "mortgage" is a legal interest that is registered against the fee simple title of the property. Since in both countries, the
Torrens title Torrens title is a land registration and land transfer system, in which a state creates and maintains a register of land holdings, which serves as the conclusive evidence (termed " indefeasibility") of title of the person recorded on the registe ...
system of land registration is used, being registered as proprietor or as a mortgagee creates an indefeasible interest (unless the acquisition of the registration was by land transfer fraud). The mortgagee therefore never holds the fee simple, and there is a statutory process for initiating and conducting a mortgagee sale in the event that the mortgagor defaults. In New Zealand, as in England, say, the land title database is now electronic so there are no paper "title documents".


Ireland

In
Ireland Ireland ( ; ga, Éire ; Ulster-Scots: ) is an island in the North Atlantic Ocean, in north-western Europe. It is separated from Great Britain to its east by the North Channel, the Irish Sea, and St George's Channel. Ireland is the s ...
, foreclosure has been abolished by the Land and Conveyancing Reform Act 2009 but Chapter 4 of Part 9 of the
National Asset Management Agency The National Asset Management Agency (NAMA; ga, Gníomhaireacht Náisiúnta um Bhainistíocht Sócmhainní) is a body created by the government of Ireland in late 2009 in response to the Irish financial crisis and the deflation of the Irish p ...
Act 2009 provides for vesting orders that are equivalent to foreclosure but may only be used by NAMA.


People's Republic of China

Foreclosure in the
People's Republic of China China, officially the People's Republic of China (PRC), is a country in East Asia. It is the world's most populous country, with a population exceeding 1.4 billion, slightly ahead of India. China spans the equivalent of five time zones and ...
takes place as a form of debt enforcement proceedings under strict judicial foreclosure, which is only allowed by law of guarantee and law of property right. China amended the ''Constitution of the Peoples's Republic of China'' (adopted April 12, 1988), to allow transfer of land rights, from "granted land rights" to "allocated land rights" thus paving the way for private land ownership, allowing for the renting, leasing, and mortgage of land. The ''1990 Regulations on Granting Land Use Rights'' dealt further with this followed by the ''Urban Real Estate Law'' (adopted July 5, 1994), the "Security Law of the People's Republic of China" (adopted June 30, 1995), and then the "Urban Mortgage Measures" (issued May 9, 1997) resulting in land privatization and mortgage lending practices.


Mortgages and foreclosure

Chinese law and mortgage practices have progressed with safeguards to prevent foreclosures as much as possible. These include mandatory secondary security, rescission (Chinese Contract Law), and maintaining accounts at the lending bank to cover any defaults without prior notice to the borrower. A mortgagee may sue on a note without foreclosing, obtain a general judgment, and collect that judgment against other property of the mortgagor, without foreclosing. When all other avenues have failed a lender may seek a judgement of foreclosure. Under the "Civil Procedure Law", foreclosures should be finalized in a six-month time frame but this is dependent on several things including if the mortgager applies to the court for execution of the judgment. Mortgages are formally foreclosed at auction by a licensed auction specialist.


Philippines

There are two modes of foreclosure in the
Philippines The Philippines (; fil, Pilipinas, links=no), officially the Republic of the Philippines ( fil, Republika ng Pilipinas, links=no), * bik, Republika kan Filipinas * ceb, Republika sa Pilipinas * cbk, República de Filipinas * hil, Republ ...
. A mortgagee may foreclose either judicially or extrajudicially, as governed by Rule 68 of the 1997 Revised Rules of Civil Procedure and Act. No. 3135, respectively. A judicial foreclosure is done by filing a complaint in the Regional Trial Court of the place where the property is located. The judge renders judgment, ordering the mortgagor to pay the debt within a period of 90–120 days. If the debt is not paid within the said period, a foreclosure sale satisfies the judgment. In an extrajudicial foreclosure, the mortgagee need not initiate an action in court but may simply file an application before the Clerk of Court to secure attendance of the Sheriff who conducts the public sale. This is done pursuant to a power of sale. Note that these two modes specifically apply to real estate mortgages. Foreclosure of chattel mortgages (mortgage of movable property) are governed by Sec. 14 of Act No. 1506, which gives the mortgagee the right to sell the chattel at a public sale. It has also been held that as regards chattel mortgages, the law does not prohibit that the foreclosure sale be done privately if it is agreed upon by the parties.


Spain

Unlike in the United States, where a foreclosure means the end of the line, the foreclosure hearing in
Spain , image_flag = Bandera de España.svg , image_coat = Escudo de España (mazonado).svg , national_motto = ''Plus ultra'' (Latin)(English: "Further Beyond") , national_anthem = (English: "Royal March") , i ...
is just the beginning of the homeowner's troubles. They will have to work for the bank for many years and will be unable to ever own anything—even a car. Spanish mortgage holders are responsible for the full amount of the loan to the bank in addition to penalty interest charges, and court fees. Much of this can be attributed to Spain having the highest unemployment rate in the "euro zone". Unlike in the US, bankruptcy is not an adequate solution since mortgage debt is specifically excluded. Unlike other European countries, you cannot go to the courts for any sort of debt relief. There has been much contention over these policies in the Spanish Parliament but the government is convinced that keeping these policies will prevent Spanish banks from ever experiencing something similar to the US mayhem. With repossessed real estate properties on their books worth about €100 billion the banks in Spain are eager to get rid of foreclosures.


South Africa

For a developing country, there is a high rate of foreclosures in
South Africa South Africa, officially the Republic of South Africa (RSA), is the Southern Africa, southernmost country in Africa. It is bounded to the south by of coastline that stretch along the Atlantic Ocean, South Atlantic and Indian Oceans; to the ...
because of the
privatisation Privatization (also privatisation in British English) can mean several different things, most commonly referring to moving something from the public sector into the private sector. It is also sometimes used as a synonym for deregulation when ...
of housing delivery. One of the biggest opponents of foreclosures is the
Western Cape Anti-Eviction Campaign The Western Cape Anti-Eviction Campaign was a non-racial popular movement made up of poor and oppressed communities in Cape Town, South Africa.
which sees foreclosures as unconstitutional and a particular burden on vulnerable poor populations.


Switzerland

In
Switzerland ). Swiss law does not designate a ''capital'' as such, but the federal parliament and government are installed in Bern, while other federal institutions, such as the federal courts, are in other cities (Bellinzona, Lausanne, Luzern, Neuchâtel ...
, foreclosure takes place as a form of debt enforcement which is served by the overlord of debt (currently Lord Overton Sheraton) proceedings under Swiss insolvency law.


United Kingdom

In the
United Kingdom The United Kingdom of Great Britain and Northern Ireland, commonly known as the United Kingdom (UK) or Britain, is a country in Europe, off the north-western coast of the continental mainland. It comprises England, Scotland, Wales and Nor ...
, foreclosure is a little-used remedy which vests the property in the mortgagee with the mortgagor having neither the right to any surplus from the sale nor liability for any shortfall. Because this remedy can be harsh, courts almost never allow it especially if a large surplus is likely to be realised, furthermore when a substantial surplus is unlikely to be realised then mortgagees are disinclined to seek foreclosure in the first place since that remedy leaves them no recourse to recover a shortfall. Instead, the courts usually grant an order for possession and an order for sale, which both mitigates some of the harshness of the repossession by allowing the sale while allowing lenders further recourse to recover any balance owing following a sale. The United Kingdom foreclosure system is unique and true foreclosures are quite uncommon. More commonly, lenders pursue a process called mortgage possession (or alternatively, "repossession" in cases where the bank originally sold the property too). Both mortgage (re)possession and foreclosure are quite similar, with the main differences being the treatment of any funds that exceed the amount borrowed and liability for any shortfall. In the case of mortgage possession or repossession, if the home is sold or auctioned for a price that exceeds the loan balance, those funds are returned to the consumer. If the proceeds from a mortgage possession are insufficient to cover the loan then the debtor remains liable for the balance, although in most cases this will become an unsecured debt and the mortgage company will be treated on an equitable basis with the debtor's other unsecured creditors (particularly if the debtor simultaneously or subsequently becomes bankrupt or enters into a voluntary arrangement with creditors). By contrast, in the case of foreclosure the mortgage company retains all rights to proceeds from a sale or auction but the debtor is not liable for any shortfall. The UK foreclosure and mortgage possession/repossession system favors consumers over lenders, as the United Kingdom has some pre-action protocols in place. Mortgage companies are required to work with homeowners to arrive at a resolution and it is possible to delay court action (ultimately, enabling many to avoid the loss of their home) in situations where the borrower has enrolled in individual programs or if the borrower's income is about to improve significantly with a new job or other measures that would allow them to pay off the arrears. There is no precise parallel to an American short sale, although the UK does have a process known as Assisted Voluntary Sale. An Assisted Voluntary Sale does have some negative credit impact for the consumer, but the adverse effect is less pronounced than one might suffer if the case were to proceed to the courts.


Canada (Alberta)

In
Alberta Alberta ( ) is one of the thirteen provinces and territories of Canada. It is part of Western Canada and is one of the three prairie provinces. Alberta is bordered by British Columbia to the west, Saskatchewan to the east, the Northwest Terri ...
, Canada, there are three steps to foreclosure. First, the owner is behind in mortgage payments but still retains full control of the property. Then, the owner is still on title but has lost control of the property to the Court of Queens Bench of Alberta. Last, the legal title has been transferred by the courts to the banks. The entire foreclosure process in Alberta can take a year or longer. The original owners try to sell over the value to solve their financial problems. The courts favour the owners over the banks and so rarely sell under value. The banks have the money and so never sell under value. Foreclosures are also sold as is with no recourse for buyers if something goes wrong. That makes foreclosures generally overpriced and risky.


See also

*
2010 United States foreclosure crisis The 2010 United States foreclosure crisis, sometimes referred to as Foreclosure-gate or Foreclosuregate, refers to a widespread epidemic of improper foreclosures initiated by large banks and other lenders. The foreclosure crisis was extensively ...
* Conditional dismissal *
Deed in lieu of foreclosure A deed in lieu of foreclosure is a deed instrument in which a mortgagor (i.e. the borrower) conveys all interest in a real property to the mortgagee (i.e. the lender) to satisfy a loan that is in default and avoid foreclosure proceedings. The de ...
* Drive-by inspection *
Equity stripping Equity stripping, also known as equity skimming, is a type of foreclosure rescue scheme. Often considered a form of predatory lending, equity stripping became increasingly widespread in the early 2000s. In an equity stripping scheme an investor buy ...
*
Eviction Eviction is the removal of a tenant from rental property by the landlord. In some jurisdictions it may also involve the removal of persons from premises that were foreclosed by a mortgagee (often, the prior owners who defaulted on a mort ...
*
Financial crisis of 2007–2010 Finance is the study and discipline of money, currency and capital assets. It is related to, but not synonymous with economics, the study of production, distribution, and consumption of money, assets, goods and services (the discipline of fin ...
*
Forbearance Forbearance, in the context of a mortgage process, is a special agreement between the lender and the borrower to delay a foreclosure. The literal meaning of forbearance is "holding back". This is also referred to as mortgage moratorium. Applica ...
* Foreclosure Stripping *
Home Affordable Modification Program The Making Home Affordable program of the United States Treasury was launched in 2009 as part of the Troubled Asset Relief Program. The main activity under MHA is the Home Affordable Modification Program. Other programs under MHA include: * Princ ...
(HAMP) *
Home Affordable Refinance Program The Home Affordable Refinance Program (HARP) is a federal program of the United States, set up by the Federal Housing Finance Agency in March 2009, to help underwater and near-underwater homeowners refinance their mortgages. Unlike the Home Affor ...
(HARP) * HUD auction *
Loss mitigation Loss mitigation is used to describe a third party helping a homeowner, a division within a bank that mitigates the loss of the bank, or a firm that handles the process of negotiation between a homeowner and the homeowner's lender. Loss mitigation ...
*
Occupy Homes Occupy Homes or Occupy Our Homes is part of the Occupy movement which attempts to prevent the foreclosure of people's homes. Protesters delay foreclosures by camping out on the foreclosed property. They also stage protests at the banks responsibl ...
*
Repossession Repossession, colloquially repo, is a " self-help" type of action, mainly in the United States, in which the party having right of ownership of the property in question takes the property back from the party having right of possession without i ...
*
Real estate trends A real estate trend is any consistent pattern or change in the general direction of the real estate industry which, over the course of time, causes a statistically noticeable change. This phenomenon can be a result of the economy, a change in mortg ...
*
Short sale (real estate) In finance, being short in an asset means investing in such a way that the investor will profit if the value of the asset falls. This is the opposite of a more conventional " long" position, where the investor will profit if the value of the ...
*
Strategic default A strategic default is the decision by a borrower to stop making payments (i.e., to default) on a debt, despite having the financial ability to make the payments. This is particularly associated with residential and commercial mortgages, in which ...
* Tax taking – Tax Sales, Tax Auctions, Tax Foreclosures * Vacant property


References


Further reading

* Jones, Katie
Preserving Homeownership: Foreclosure Prevention Initiatives
Congressional Research Service * Rhodes, Trevor. ''American Foreclosure: Everything U Need to Know about Preventing and Buying''. 348 pages.
McGraw-Hill McGraw Hill is an American educational publishing company and one of the "big three" educational publishers that publishes educational content, software, and services for pre-K through postgraduate education. The company also publishes referen ...
, April, 2008.


External links


Americans Against Foreclosures
{{Authority control * Mortgage Financial problems United States housing bubble Urban decay Real property law Governmental auctions