Foreclosure

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If you have borrowed money to buy property and you miss a repayment, you are known as delinquent. Typically, if you miss three or more payments, you are known as seriously delinquent. At this point it usually becomes apparent that you can't make any more payments, and so you have defaulted on the loan. The lender can then proceed to foreclose on the loan, meaning it will take steps to assume its right to the property. In most states this right is contained in the mortgage agreement, while in a few states a deed of trust is used instead. For the lender, a deed of trust can be a quicker route to taking possession of the property; a mortgage lender ( mortgagee) usually has to pursue its right through the court system. Having successfully foreclosed and taken possession of the property, the lender will normally try to sell it in order to recover some of the money that was lent to you. If the proceeds from the sale of the house do not cover the amount of money owed to the lender, then the lender typically has the right to pursue you for the balance - the remainder - of the loan. In addition, you may be responsible for fees and expenses associated with the foreclosure process. An alternative to foreclosure, if the lender agrees, is a "short sale." This is when the owner sells the house and the lender may agree to write off, or forgive, the amount of the loan that is greater than the proceeds from the sale. This typically only occurs when there is already someone willing to buy the home; a short sale can save the lender a lot of trouble and money by disposing of the property quickly. Although foreclosure is mostly found in real estate, it's the word sometimes used when a lender repossesses something that it lent money for. Note that the Servicemembers Civil Relief Act may provide some protection against the threat of foreclosure for members of the armed services when on active duty. See also Deed in Lieu of Foreclosure.