DREB wants to share the basics of understanding Foreclosure. We have clients that are asking and have concerns about what will happen after the mortgage and rent covid relief expire. The word “foreclosure” means “to stop” or “to prevent.” Today we are familiar with the word primarily because of its use with reference to mortgages,

In law, to foreclose a mortgage means to cut off a borrower (also called a “mortgagor”) from his right to redeem a property. Foreclosure provides the legal means by which a property owner may be stripped of that property because of his failure to live up to the terms of the contract he made when he borrowed money and pledged his real property as security for the loan.

Banks do not give mortgages

Now then a word about banks and mortgages. Banks do not give mortgages. That is surprising to many people, but it is nevertheless true. Banks loan money and take back mortgages as security for the loan. Thus, if your friend tells you that he “got a mortgage from the XYZ Savings Bank,” he may be using the accepted parlance to describe the exchange that has taken place, but he is not quite correct. This is an important point to bear in mind, for reasons that will become clear as we go on in this article. Purchase money mortgages are usually signed at a closing where the seller simultaneously gives a deed to the purchaser At that time, the purchaser executes papers that are then given to the title company representative, who sees that they are recorded in the local county clerk’s office. Of course, the paper’s debts are the deed to the property and the mortgage papers which pledge the property as security for the loan.

The party doing the mortgaging or pledging is the new owner and, in this instance, he becomes the mortgagor The bank, which is the one to whom the property is pledged becomes the mortgagee. People often confuse these terms because they regard the bank as the one owning the mortgage. Many of the words used in real estate have their roots in English law, which was in turn based on Roman law. In Latin, “or” denotes a person performing an action; “ee” is the one receiving the action. Hence such terms as mortgagor/mortgagee, grantor/grantee, offeror/offeree, and so on, are all common in real estate transactions. Making sense of the terminology In some states, there are mortgages. In others, there are deeds of trust. A deed of trust differs from a mortgage in that the (borrower) hypothecates his legal title on the property to a trustee who is the actual legal titleholder while the debt sits. The process is a pledge of the property to a third party, to ensure that you, the borrower, will make payments as agreed.

The deed of trust is an instrument favored by banks since it makes applying the foreclosure process considerably easier should the need arise to do so. Mostly no judicial approval is required to begin foreclosure; in effect, the receiver (a term we’ll learn more about later, ) is already appointed. As an owner you can note in many areas, the deed of trust carries with it something called the “right of redemption.”

The right of redemption is a process whereby the defaulting mortgagor can regain title to the property by fulfilling specific legal requirements. Although the property has been foreclosed, this foreclosure is revocable and can be overturned. The process is similar to an appeal. Rights of redemption exist only in certain specific instances; we’ll review them later in the upcoming posts.

Remember if you are facing or got a notice of foreclosure, you can also speak with a CRG HOMES NJ Agent or any real estate agent that may be a good idea. They may be able to help you and guide you with a short sale before even you will go into foreclosure or suggest you some out-of-the-box negotiation alternatives that your lander met. By short-selling your home, you save your credit, you save money, and you do not have to deal with all the aggravations. Direct Real Estate Buyers are normally paying for all those fees when we buy your home.