Term of the Day: Foreclosure
Foreclosure is the process through which the lender claims ownership over a piece of property when the mortgage borrower defaults on the payment.
PropTiger Explains Foreclosure
When mortgage borrowers default on the payment for long, lenders have the legal right to evict them and sell their home, depending on the conditions stipulated while the loan was extended. In India, the period if often six months.
When the default period extends beyond the stipulated limit the bank will valuate the property, and sell it by inviting tenders or through a public auction. The bank may hold the property itself. But, the foreclosure process may differ, depending on the bank and where you live. Banks are within their rights to claim your property because this is a legal recourse available to them to recover your outstanding debt.
A foreclosure may happen because the borrower is ill, unemployed, recently divorced or deep in debt. The longer you default on your loan, greater would be the difficulty to pay off the debt.
To cut down on costs, many American banks now outsource foreclosure processing tasks to India.
Check out PropGuide's comprehensive guide to real estate terms here.
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