How To Build Massive Wealth In Real Estate Foreclosures
Understanding Foreclosures
- By Jeffrey Ringold
© All rights reserved.

Defining Foreclosure and How it Occurs
According to The American Heritage dictionary, foreclose is defined as: 1. To deprive (a mortgagor) of the right to redeem mortgaged property, as when he has failed in his payments. Foreclosure is defined as: 1. The act of foreclosing, especially a legal proceeding by which a mortgage is foreclosed. In layman's terms foreclosure is when a borrower fails to make payments on his or her house and the bank takes action to protect their loan. How does foreclosure happen?

When someone buys a home they generally finance the purchase. In other words, they borrow money.

There are two parties involved in this transaction. There is a lender, also called the mortgagee and there is a borrower, also called the mortgagor. The lender loans the borrower money to purchase their home and, in turn, the borrower gives the lender a promissory note to repay the borrowed sum of money.

Now, the next step is the lender has to protect their loan amount, so they use the house as collateral.

The mortgage becomes what is called a lien on the property. That house can't be sold with clear title until that lien is paid off. The promissory note is a promise that the borrower will pay the lender back in a timely fashion and as stipulated in the note.

Note: Some states use what are called Trust Deeds as opposed to a mortgage. This newsletter is focusing on properties with a mortgage as the lien.

When a borrower does not adhere to the terms of the agreement, meaning they don't make their payments, the lender starts the foreclosure process in order to recoup their money. Typically, a borrower must be 90 days behind in order for the lender to the start the foreclosure process.

This means the borrower has not made payments in approximately three months. The borrower is said to be in arrears at this point. They owe the lender the 3 months of payments plus interest. The lender, under the terms of the original agreement, has the right to call the balance of the loan due immediately.

This starts the foreclosure process. If the borrower does not pay the lender the money, the house will go to public auction and will be sold to the highest bidder.

About The Author:
Jeffrey Ringold is the author of 'How To Build A Massive Fortune Through Real Estate Foreclosures'.
He is a licensed real estate agent and investor who has bought or sold over $12 million in real estate over his 7 year career. He is consulted by leading real estate developers and investors almost daily.

For more information on real estate investing and foreclosures, visit his web site HERE.