The difficult financial times our country faces as well as the struggling housing market has caused foreclosures to be filed at an alarming rate. The state of Florida has the highest foreclosure rate of any state in the United States, at just over 17%. Constantly hearing about foreclosures has left many people wondering, “what is foreclosure?”
Foreclosure is the legal process where a lender attempts to acquire the balance owed by a borrower on a loan by repossessing and selling the real estate deemed collator for the loan.
While foreclosure can be applied to a loan on any real estate, in the past five years foreclosure has become synonymous with borrowers defaulting on mortgages and the repossession of their homes.
When people take out a mortgage from a bank or lender, the home itself is considered collateral on that loan, meaning that if they fail to honor that contract, the bank has the right to the real property. Part of the mortgage is a promissory note, or an agreement to pay, which is secured by a lien on the property. Foreclosure is set in motion when the borrower does not meet the obligations of their promissory note, which puts them in default. Therefore the lender has the right to attempt to collect those payments and reposes the home if the money cannot be collected. In the state of Florida the foreclosure process runs through the judicial system, but this is not true in every state.
The foreclosure process begins the legal action by the lender to collect the delinquent payments as well as any late fees associated with not making payments on time. At the conclusion of the foreclosure process the lender will claim ownership of the property from the borrower. The lender can then sell the property and use that money to cover the remaining balance of the loan for which the borrower will no longer pay.
If the sale of the property does not cover the remaining balance of the mortgage, the lender can file a claim for a deficiency judgment, which will hold the borrower responsible for paying that remaining balance. The deficiency judgment gives the lender the legal right to collect the remaining balance by repossessing the borrowers other assets, garnishing wages, and taking money from bank accounts.
Foreclosure can be a long and difficult process and can result in a debilitating financial and credit black mark, which can make life difficult for the borrower for many years. There are options to avoid foreclosure, but only an experienced Jacksonville foreclosure defense attorney can help assess your situation and determine what your options are. Call the Law Office of Justin McMurray P.A. today to set up your free consultation with a foreclosure defense attorney (888) 316-2131.