A Foreclosure Settlement is an instrument in which a mortgagor who is supposed to be the borrower transfers all interest in a real property to the mortgagee who is the lender. This is done in order to satisfy a loan that is in default as the person has been unable to repay it and [...]
A Foreclosure Settlement is an instrument in which a mortgagor who is supposed to be the borrower transfers all interest in a real property to the mortgagee who is the lender. This is done in order to satisfy a loan that is in default as the person has been unable to repay it and thus avoid foreclosure.
Hence, there is a transfer of property rights in exchange for the repayment of the mortgage rather than the financial institutions taking over the property. This way both the borrower and the lender get to gain. The advantage that the borrower has is that his loan does not become a default one and go in for foreclosure. The advantage of the lender is that he receives the lower cost of repossession and the time required to get it. The value of the property must be equal to the fair value and the contract must be voluntary and entered in good faith by both the parties involved.
There must be a written document to support this. Both the parties should have no obligation to continue with the deal unless it is made into a final agreement and signed by both. Hence a foreclosure settlement offers a win-win situation for both the parties involved.
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