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What is foreclosure ?
(Westchester County, NY)

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thomscric83 posted on 16 Mar 2010 01:58 AM

Foreclosure is a process that allows a lender to recover the amount owed on a defaulted loan by selling or taking ownership  of the property securing the loan. The foreclosure process begins when a borrower/owner defaults on loan payments (usually mortgage payments) and the lender files a public default notice, called a Notice of Default .

The foreclosure process can end one of four ways:

   1. The borrower/owner reinstates the loan by paying off the default amount during a grace period determined by state law. This grace period is also known as pre-foreclosure.
   2. The borrower/owner sells the property to a third party during the pre-foreclosure period. The sale allows the borrower/owner to pay off the loan and avoid having a foreclosure on his or her credit history.
   3. A third party buys the property at a public auction at the end of the pre-foreclosure period.
   4. The lender takes ownership of the property, usually with the intent to re-sell it on the open market. The lender can take ownership either through an agreement with the borrower/owner during pre-foreclosure, via a short sale foreclosure or by buying back the property at the public auction.

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