Indiana: What is the difference between defaulting and foreclosure on a mortage?
Nov 18, 2008 in
Financial and Loan Tips
Paul H
Curious as to the difference between defaulting and foreclosure on a mortage? What are the different things that could happen if you keep one house and need to get rid of another wheather it be defautling or foreclosure? What are both possible outcomes?
Curious as to the difference between defaulting and foreclosure on a mortage? What are the different things that could happen if you keep one house and need to get rid of another wheather it be defautling or foreclosure? What are both possible outcomes?
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3 comments
rhgizmo on November 20, 2008 at 11:49 am
defaulting is not paying for your mortgage, foreclosure is the process by which the bank gains ownership of the property through the court system from someone who has defaulted.
sophieb on November 23, 2008 at 7:02 am
defaulting means you didn’t pay (so they’re planning to take action against you).
foreclosure is the act of the bank or mortgage company taking back the home
Are you saying you own two homes with the mortgage company? Well if you didn’t pay on just one then that one is the one the mortgage company will foreclose on.
(I don’t really understand your question, we need more info)
J k on November 26, 2008 at 1:51 am
Defaulting is not making your mortgage payments; foreclosure is the process the lender takes to reclaim your home because you did not make your mortgage payments. If you have 2 homes and keep one, but lose the other because you did not keep making the mortgage payments on it and the lender foreclosed on it and took it back, the lender could place a lien on your existing home for whatever money they are owed but did not receive from the sale of the foreclosed home. (say you owe 400k on the home and it sells for 350k at the auction; you still owe the lender 50k) Generally, if you miss 3 payments you are sent a letter called a Notice of Default, which warns you that foreclosure proceedings will begin immediateley (a Notice will be recorded) if you don’t contact them and make those payments. In CA, it takes 3 months after a Notice is recorded with the county for a sale of the house to begin; a notice is prepared and published in the local newspaper. it takes from that point another 3 weeks before the house actually goes to auction. When this happens and someone buys the place, that’s it. You are out. The local sheriffs will physically remove you and your property if they have to, and bill you for it. You credit is affected for 7 years or longer. Hope you don’t take this route. Your best bet is to talk to the lender and see if they can help by putiing you into a more affordable loan. Remember, they would rather see you keep the home than take it back. Hope this helps