Archives: 2008 April

Many properties, whether residential or commercial, are being lost by their owners due to foreclosure. The best way to avoid this from happening to you is to understand documents pertaining to mortgage loan and foreclosure including the mortgage, promissory note and a deed of trust.

What are Mortgages?

The term mortgage, or mortgage loan as it is normally called, is associated with foreclosure. In a sense, when a loans maturity date is reached without payment of both the principal amount and interest, then foreclosure is imminent for the said property or business.

A mortgage is using a property, whether real estate or commercial, to be used as security for payment of a debt, or a mortgage loan. Normally, a mortgage loan is used to refinance a business or to be used as a basis for home improvement. When done, a contract, or a mortgage, will then be made by the lender containing the information of the said property, the amount loaned, and the interest rate incurred on the principal amount, and the maturity date.

When the borrower fails to pay the exact amount as stated in the mortgage, then they may issue a promissory note requesting the lender to extend the maturity date.

Promissory Note and what’s in it?

Trying to get out of a foreclosure situation is a bit too much to handle when you are having financial difficulties. Most often in the United States, most debtors go as far as to declare a bankruptcy in court just to get out from under their debts. But for some, selling their property to stop the foreclosure as well as getting a meager earning for a fresh start can be quite appealing.

Stopping a foreclosure:

Before you attempt to sell your property to stop its imminent foreclosure, there are other options available before you lose it entirely. One way to pay your debt is to meet with your lender and request a Forbearance. This method is simply defined when a lender will waive some fees on your debt so that you will be able to pay on time.

A debtor can also use refinancing as a method in paying your debt to avoid a foreclosure. You can search around for a lender which provides the best deals in refinancing loans so you will be able to pay your first loan and breathe a little easier with the extended terms of the second.

Loan modification can also be an option to stop a foreclosure. A loan modification is somewhat akin to refinancing wherein the only difference is that your original lender will grant you a new loan to pay off the first one without re-applying.

Should you sell?

Non-judicial foreclosure happens without any supervision from the court or any legal statutes in terms of proceedings for foreclosure. Though it might sound as if it’s almost impossible for the court system to directly intervene with the proceedings of a non-judicial foreclosure; knowing the details about this kind of foreclosure might give you enough grounds to bring it to legal light.

Non-Judicial Foreclosure: Overview

In a non-judicial foreclosure, the lender has the power to impose its authority on the said property once it is foreclosed through the use of the power of sale clause. The mortgage holder, or the lender, will have the ability to make use of the said property to pay off the debt of the borrower by means of a sale or simply putting an embargo on it.

Since there is no legal statute in the transaction between the lender and the borrower, the contract will simply have the essence of being authorized in any way the lender might see fit to exercise his or her power over the foreclosed property. In a way, you are simply telling the lender that you are selling the property in advance without any recourse whatsoever.

Check the contract carefully:

It is always important for the borrower to read the contract or the agreement carefully before signing a mortgage with a lender; the borrower should take note of clauses and stipulations giving the lender full authority of the property and the like. Take note of the maturity date, interest rates, and hidden fees that the lender might have inserted in the contract.