Most of our readers in Florida probably entered into a mortgage agreement in order to finance the purchase of their homes. These days, with interest rates higher than they have been in decades, a mortgage can become quite a burden if an individual or family’s financial situation gets tight. In fact, the inability to pay mortgage payments as required could lead to a foreclosure. So, what are the basics of how foreclosure works that our readers should know?
Foreclosure basics
For starters, the basic concept of foreclosure is that it is a process by which a financing agent can takeover full ownership of a home or property when a “mortgagor” – the borrower – does not comply with the terms of the mortgage agreement. Through this process, the financing agent must first give the mortgagor notice of the default in payments – in reality, most people already know that they are missing payments or are only making partial payments. But, the notice is an important first step.
Next, there may be a window to negotiate alternative terms for the mortgage and repayment of the debt – but that is not automatic by any means. Sometimes, mortgagees are not open to negotiations and will proceed with getting the proper authority to seize ownership of the home or property in question.
If the mortgagee is successful in gaining full ownership, the home or property is usually sold at auction – unless the mortgagor can somehow come up with the full amount of debt owed. Once the home or property is sold, that proceeds are applied toward the outstanding debt that is owed under the terms of the mortgage agreement.
