Foreclosure Homes - Government Foreclosure Homes
Recently the word 'foreclosure' has been hitting the headlines not only in USA but the international community too has woken up to the foreclosure crisis that has been rocking America. It has pushed the country into recession. The world has not been spared.
Foreclosure Homes is nothing new - it has always been a tool in the mortgage industry. By using it the lenders realize unpaid dues from borrowers. A person buys a house by borrowing money from a lender, generally the banks. The property is kept as security or mortgaged to the bank. Every month the borrower pays to the lender the interest on the loan taken plus a part of the capital. This is the general rule.
If for any reason the person fails to make the monthly payments then the borrower is said to be defaulting. After defaulting for three months the loan becomes delinquent. Then the lender sends a notice to the borrower after seeking the permission of the proper authorities to foreclose on the property.
The foreclosure is a process by which the property is put up for auction. The money obtained by selling the house at the auction is taken by the lender or by others who have a lien on the house. This means others like contractors or even the government might place a lien on the house for unpaid bills or taxes.
If a satisfactory buyer is not found at the auction then the house reverts to the lender. It becomes REO or real estate owned or Repo house - repossessed by the banks.
In USA each state has different foreclosure homes laws - some permit judicial and others non-judicial foreclosure homes. There are states that allow both types of foreclosures.
Foreclosure Homes have been going on from time immemorial - going back to the date when lending and borrowing became a part of the socio-economic structure. But what is unique in this age is the staggering number of foreclosures running into millions in USA.
Pundits are shaking their heads over the problem to find the roots and the solutions. The government is in a tizzy offering one solution after another as revenue collection falls. Foreign investors are frowning as the securities they have bought have been reduced to trash. Exports from China have crashed leading to factories closing down in that country and subsequent social unrest. Recession has set in Europe. Foreclosure Homess have sent off this chain of action and reaction.
