Question:

What is a foreclosure sale?

Answer:

Unfortunately, some people know what is a foreclosure sale from personal experience. This is a public auction where the collateral is sold and proceedings are used to satisfy liens on the property.

First lien holder is reimbursed first; any subordinate liens as second and third trust are satisfied if there are enough proceedings from the foreclosure sale. If subordinate lien holders cannot get back their money, they could waive the obligation or file deficiency judgment.

After repaying any mortgage debt, the foreclosure sale excess, if any, belongs to the property owner.

If you default on any junior lien on the property, have in mind that a second mortgage lender can foreclose on the property even if you are on track with your first mortgage payments.

Foreclosure sales can be avoided with a deed in lieu of foreclosure. Although voluntarily submitting the deed of your property to your lender is unpleasant as well, avoiding a public foreclosure sale may be worth it. Also, a deed in lieu of foreclosure, despite damaging your credit report as well, will be less damaging compared to a foreclosure and the succeeding sale.

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