Foreclosure is one of the most frightening words in the English language. Many people are lucky enough never to have to worry about the practical applications of foreclosure, but some people find themselves struggling with debts and payments that are simply beyond their ability to pay. This is especially true coming out of a recession, which is why even though the economy is recovering, some people may still be in a financial hole.
In the most basic terms, foreclosure essentially refers to the ability of a mortgage holder to repossess ownership of a property, usually to resell it and make back the lost money on unpaid mortgages. When you take out a loan to purchase a house and make your monthly mortgage payments, you essentially enter into a payment contract with the person to whom you are paying the mortgage. You own or possess the house only insomuch as you are able to make the required payments to the mortgage holder.
While some mortgage holders may show lenience and choose to work with people regarding payments, a mortgage holder is legally within his or her right to foreclose on a house as soon as a person defaults on the mortgage. There are two main types of foreclosure that U.S. residents should be aware of.
The first is "judicial sale", which is similar to a Chapter 7 bankruptcy. A judicial sale sees the mortgaged property sold off under a court's legal supervision, with proceeds then paying off the remaining mortgage and lien holders.
The other type of foreclosure is called "power of sale", which is much like judicial sale, but with one key difference: the sale is unsupervised by the courts. This often means that the sale is faster, but it may not be as fair to all parties involved.
Real estate can be expensive in Florida, especially in a coastal city like Melbourne, so it is not unheard of for people to be unable to make a mortgage payment. Additionally, thanks largely to the recent recession, many homes are currently under foreclosure. Enlisting the aid of an attorney can help you better understand foreclosure in our state, which may help you keep a house that would otherwise be foreclosed on.