What is a foreclosure?
Foreclosure occurs when a secured creditor, often a bank, attempts to recover funds owed to them based on a promissory note by selling the collateral. Simply put, more than likely you have borrowed money from a bank or a mortgage company in order to purchase or refinance a home. When asking a bank or mortgage company to lend you the money for the purchase or refinancing of the home, you are making a promise that if you are unable to pay them back, they are entitle to take the house from you.
There are multiple steps in the foreclosure process. The first of which is pre-foreclosure. Prior to foreclosure is the pre-foreclosure step. If and when a borrower is delinquent on a mortgage payment, is often the first sign of a future foreclosure. When this payment is late, the issuing lender or bank typically sends a notice of delinquency.
Another sure sign is when the borrower misses additional payments to the first late payment and the following late notices. When this pattern of late payments and ignored notices occurs, the banks will next attempt contact through phone or writing. This shows that the lender is trying to resolve the situation with the borrower by allowing alternatives to an actual foreclosure. However, if arrangements are not agreed upon and the customer continues to miss payments, the bank issues a demand for payment in full, which is referred to as a promissory note.
