Central Wisconsin Foreclosures and Short Sales
Foreclosures are sometimes a welcome sign for buyers, indicating the home can be purchased for less than market value, but for the other parties involved in the sale they are a frustrating necessity. These situations generally arise when a property owner borrows money from a creditor to purchase property and fails to pay back the loan. If loan payments go unpaid for a certain amount of time after the due date, the borrower is considered in default. Creditors generally have two options for getting their money back, both involving the sale of the property.
One option is a short sale, which occurs when the property owner proves he or she cannot pay back the loan. Creditors agree to let the borrower sell the property and use the proceeds to pay off as much debt as possible. If the property owner does not make enough in the sale to pay back the loan in full, the lender agrees to accept less than the amount owed. This avoids the time and costs involved with obtaining the remainder of the loan.
Foreclosures are the other option. In this case, the creditor obtains the legal rights to the borrower's property and sells it in an attempt to recover the defaulted payments. This is called repossession, and in most cases creditors will go through a court of law in order to legally repossess a defaulted borrower's property. The court will cut off a property owner’s equity of redemption, ensuring that the property remains in the hands of the creditors. If this does not occur, the borrower may pay the debt at a later date to regain the rights to his or her property.
In most situations, a court will oversee the repossession and sale of a foreclosed home. This prevents the borrower from taking legal action against the lender and petitioning for equity of redemption. The proceeds of the home will pay off the mortgage, and leftover profits will pay off the borrower's other debts. These debts often include taxes, insurance payments, and homeowners' association dues.