Are Lafayette Foreclosures in Lenders’ Best Interest?

Are Lafayette Foreclosures in Lenders’ Best Interest?

Unfortunately, foreclosures in Lafayette, California are making a comeback in 2023 amid inflationary pressures. In the first 6 months of 2022, there were nearly 165,000 in the United States. This is slightly under the number recorded pre-pandemic in 2020.

Leading the pack were New Jersey, Ohio, and Illinois. As the price of fuel and food continues to rise, experts believe that foreclosure will become more common.

What Is a Foreclosure?

Before diving into whether a private lender loses money on a foreclosure, it is important to define the process. When a homeowner stops making mortgage payments for consecutive months, the lender may pursue foreclosure.

This is a legal process that the bank follows to repossess your home. Each state may have different legal requirements to follow for foreclosure. The outcome of a foreclosure is that the lender evicts you and sells your home at an auction.

In general, homeowners want to avoid foreclosure. It has a negative impact on their credit score and will remain in their history for many years.

Are Foreclosures in a Lender’s Best Interest?

All stakeholders generally want to avoid foreclosure. For lenders, the legal process is long and expensive. They have to retain legal counsel to process the foreclosure through the state’s judicial system.

If the homeowner secures their own counsel, it could be a long and expensive fight. The outcome may not be favorable as the homeowner’s lawyer helps them stay in the home as long as possible.

Also, it is important to remember that the lender is losing monthly revenue while the homeowner is in delinquent status. They are not collecting the principal and interest that they planned on.

The financial situation may not improve when the lender reaches the final stages of foreclosure. They may find success in eviction and get to the auction milestone.

However, there is no way to predict how much the property will sell at auction. There are many instances in which the home sells significantly below market value. Here, the lender may take a significant financial loss on the property in the long run.

Despite these risks, lenders are not always willing to work with homeowners. The vast majority prefer the foreclosure process over a loan modification that keeps a family in the home.

How Can Lafayette Homeowners Use This Knowledge?

Now that you understand that lenders generally want to avoid foreclosure, it is time to start your legal fight. There are legal professionals that can keep you in your home.

They know your rights as a homeowner and will exercise all of them to retain ownership. Our lawyers are experts on state laws and will use them to their advantage to keep you in the home.

If you are worried about foreclosures and need legal counsel, contact us today to schedule a consultation appointment.