What is a Foreclosure?
Most arrangements for property owners involves a bank or mortgage loan to buy a property, whether it is a home or a commercial property, entail a promise to pay a stream of money (mortgage or note) over time in order to access the total amount in the present. The actual collateral on the loan is the property itself. As a payment to the lender for the use of the money upfront, the borrower pledges to pay a certain percentage of the loan as interest. All this is Mortgage 101, but the sticky part comes when the borrower is unable to make the promised payments in a timely fashion. After a specified number of attempts by the lender to get the borrower to pay, the lender assumes the rights to the property and endeavors to recoup its costs. This legal action is undertaken only after a waiting period that allows the borrower a reasonable chance to catch up on payments. Some lenders wait for up to a year, giving the borrower every opportunity to repay. Most only wait 3-4 months before they take the property back.
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What are the specific foreclosure types?
HUD
HUD stands for the Department of Housing & Urbn Development.
They promote home ownership and one tool they use is to insure low down payment loans to borrowers through their FHA program. This loan is great for lenders because they are attractive to owner occupant buyers with a low down payment and the loan is payment guaranteed. HUD will insure the lender against any loss due to the borrower defaulting.
As an example, if a lender gives a borrower an FHA loan and the borrower defaults, the lender will foreclose on the property.The home will be sold at public auction and if the home does not sell at the public auction, the lender will be the new owner.The lender has the option of going to HUD with a claim to recoup the lenders loss and HUD receives title to the home.HUD will then turn around and sell the home through its contracted management company.
VA
VA stands for the Department of Veterans Affairs.
So, let's get started by first finding out how a home becomes a VA owned home.Well everyone probably is aware that The Department of Veterans Affairs (VA) provides loan benefits to qualified veterans by guaranteeing loans to lenders that make these loans.The loan is a zero down payment loan with a competitive interest rate.Of course, if the borrower defaults on the loan, the lenders will foreclosure.VA acquires these homes from lenders under the guarantee program.So in essence all the homes for sale by VA were recently foreclosed on by the lender.
For more detailed information on HUD, go to www.buyingforeclosureinvirginia.com.
