Foreclosure is a phenomenon that is dreaded by existing debtors. Foreclosure occurs when the lender or lending institution decides to foreclose (i.e. to stop all possibility of) the mortgagor’s option of paying back the lender and thus obtaining his/her rightful property.
Obviously, neither lender nor borrower wants to indulge in the process of foreclosure in housing loans. For the borrower, it means the loss of something that has seen a lot of investment – both financial and emotional. For the lender, it means a long transaction that leads to assets staying frozen over a long period of time.
Foreclosures, when they take place, can do so by many methods. The two most popular methods are:
However, foreclosure can lead to property being made available at extremely cheap rates to people who have the finances to purchase it. With a good real estate agent, it is possible for the lending institution to generate profits off foreclosed homes as opposed to having to deal with them as liabilities for long periods of time.