The US has witnessed millions of property foreclosures in the last few years. The ?sub-prime mortgage crisis?, as this economic phenomenon has come to be termed, has had a devastating effect on the US economy. It has also snowballed into a pernicious global wave, playing havoc with stock markets around the world.
What Causes a Property to be foreclosed?
What leads to a property foreclosure? In short, the inability of the homeowner to timely repay the mortgage loan installments to the home finance lender. Aspiring buyers invariably take a loan from such mortgage behemoths as Fannie Mae or Freddie Mac, federal agencies as HUD or VA, or banks, to acquire their dream homes. Such loans come under a variety of flexible schemes, involving different amounts of finance, varying durations, and different terms of interest {fixed rate or adjustable}. The homebuyer is obliged to periodically repay the loan amount in convenient installments.
When the buyer fails to meet her loan liabilities timely, the lender serves her with a notice of default. After repeated reminders and the legally stipulated period of waiting {usually, 90 days}, the lender is free to exercise its right to foreclose the property. The lender subsequently auctions the seized home and seeks to recover the balance of the loan amount. Since the listed prices have no correlation with the prevailing market value of the properties, buyers get a rare chance to purchase splendid homes at alluring discounts.
A Godsend for Potential Homebuyers
A property foreclosure doubtless spells anguish to the dispossessed homeowners, but its discounted pricing works as a fortunate thing to potential homebuyers. This represents a classic example of the ruthlessness of economic forces, as well as one person's bane being the other's boon.
The sheer number of the property foreclosures across the length and breadth of the US have rendered the foreclosure auctions the first resort of the buyer in her search for a handsome house at an affordable price. Indeed, the government foreclosures have acquired the stature of a virtual cottage industry within the real estate market, eagerly patronized by the buyers.
