The lending market has not been left out of the massive disruption with the pandemic disrupting global activities. Several strategies implemented by private lenders to fully understand why borrowers defaulted are no longer viable enough to be relied on. With the new norms, a private lender must be well acquainted with enough tactical strategies to understand when a borrower defaults.
Several alternatives are available to the lender when borrowers default on their loan repayment. One of such is foreclosure. A foreclosure is an attractive option most lenders offer to borrowers, such as modification, forbearance, and deed in lieu. However, suppose the lender decides to go along with foreclosure. In that case, there are several things he should know, such as the different types of foreclosures, the process involved, and restrictions surrounding foreclosures.
Foreclosure is a legal action the lender takes to recover his loan balance when a borrower stops making payments by coercing the sale of the property serving as the loan’s collateral. There are two different types of foreclosures available to the borrower: Judicial and Trustee sale. There are no specific limitations or restrictions around foreclosing on a property by a lender so long as the borrower has monetarily defaulted the loan.
The most common type of foreclosure used by lenders today is the Trustee Sale which has about four steps involved before success.
- Issuing a letter of demand.
- Recording a default notice.
- Posting a sale’s notice.
- Auctioning the collateral asset.
Lenders generally need to be aware of the whole process involved in foreclosing on an asset before proceeding with such action. To read more about the Foreclosure process and its restrictions, click here
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