Credit gives the word to pay either by repaying it or returning those resources later. In other words, this credit is the method of making the reciprocity formal, legally enforceable, and of course, extensible to a vast group of people who are not related.
However, the resources provided may be financial or have goods or services, like consumer credit. The credit covers any form of deferred payment. Credit generally gets extended by the creditor, the debtor or lender, and sometimes the borrower.
Now, foreclosure is a term that refers to the process of seizing mortgaged property with the objective of recovering unpaid loans. Foreclosure is a statutory process that allows the lenders of a loan to recover their money by selling the property that has been mortgaged under that loan. It may be referred to as a legal remedy offered to loan lenders for scenarios where the loan borrowers fail to repay the loans.
In this process, when a borrower ends up defaulting on a loan that he acquired by mortgaging a property he owns, he thereby ends up surrendering ownership rights to that mortgaged property. Here, the lender is allowed to recover the amount owed to him by obtaining ownership of the mortgaged property and selling it.
There exist six phases through which a foreclosure takes place in the real estate industry. They are as follows:
• Payment Default- A borrower is said to have committed payment default if he misses at least one mortgage payment. On missing one payment, the defaulter is given a grace period of about 15 days, after which he is served with a letter or a phone call.
• Notice- On missing due payments for about 4 months, the borrower is served with a notice of default (NOD). This requires the borrower to start making payments within 30 days or his mortgaged property goes into foreclosure.
• Sale notice- In the initial stages of foreclosure, the legal representative of the lender, known as the foreclosure trustee, obtains permission from the Court and advertises the property for a public auction.
• Sale by Trustee- The property is put up for auction whereas the highest bidder takes ownership of the property.
• Asset management- In case the property is not sold at the public auction set up for the purpose, the lender takes full ownership of it and is free to sell it personally or with the help of brokers. He may resort to asset management to make the property more attractive to prospective buyers.
• Eviction Notice- Once the sale is complete, the ownership of the property is changed. At this time, an eviction notice is issued which orders any persons living on the premises to evacuate at the earliest.
