Right now, in the U.S. thousands of people are losing their homes and other properties due to foreclosures. Sadly, the Midwest part of the country has the highest number of foreclosures happening every year and such a high numbers of mortgages and auctions are affecting the real estate scenario of the country. The percentage of foreclosures has gone up to 47% since the last year and is increasing with time. It is being predicted by economists that these mortgages are going to rise in the coming months. According to Economist David Shulman of the UCLA Anderson Forecast, foreclosures will continue to rise for the remainder of the year as more adjustable-rate mortgages reset. California has the highest foreclosure rate and is set to rise.
Foreclosure is a complicated process and raises a number of questions in people’s mind. After the property is mortgaged and auctioned, where does the property go and what happens of it? How do bankruptcies come into picture? How is the real estate situation of the country? These questions are on everybody’s mind and here is some information that will help you understand these questions and their answers. To understand what the effect of foreclosures is, you first need to understand what a foreclosure is.
When a group fails to make payments or dues usually up to 3 months, the authorities take an action against the mortgage borrowers and the lender has the right to take over the property after the process of the foreclosure is complete and the borrower still hasn’t been able to pay the complete dues. Approximate time taken by the process to be complete is 5 to 6 months and after the process the borrower has to leave the place as he or she loses all right to that property.
What happens to mortgaged property?
As the rights of the property now rest with the lender, in many cases the bank, there are many options available to them to make use of the property. First option is mortgaging the property right away. The lender puts the property on auction at the time when the foreclosure deal is finalized and the lender takes in whatever the highest bidder has to pay to collect their dues. Most of the time, the new owner get the rights the property in a lower-than-retail price and in this case sometimes the lenders get partial payment for the dues and again the mortgage borrower is entitled to pay the rest of them.
When the bank or the mortgaged lender comes in terms with the fact that the property owner many not be able to give back the dues that had to be given as repayment, the bank or the group decides that they will wait for a better opportunity to sell the property so that they get better returns out of it. This means there will be a delay in selling the property and such property is often called as bank owned property. One problem that arises in bank owned property is that the bank has to maintain it and it takes a lot of resources which is expensive. Thus when not done properly it reduces the value of the place and the banks are not able to sell it.
How do bankruptcies feature in foreclosures?
When a person’s property is going to be mortgaged, one option to avoid losing is to file the form of bankruptcy. Most people think after filing the bankruptcy, nothing can go wrong and they will never lose their house but that is not the case. When filing for a bankruptcy, there are two forms; chapter 7 bankruptcy and chapter 13 bankruptcies. The chapter 7 can you help you delaying the foreclosures with the help of the order known as automatic stay and chapter 13 can sometimes save your home as you can sit with the lender and work out a repayment plan, though not everybody can file chapter 13.
Thus, while borrowing money from bank or other mortgage lenders, a proper risk assessment should be done and extra resources counted so that the situation doesn’t arise. A good bankruptcy and foreclosure attorney can also be of help to prevent foreclosures. No matter how easily or simply somebody puts it, foreclosure is a stressful process and takes a lot of resources and time and poses a threat to the safety of your family and loved ones if such a situation arises.