It is helpful to understand the basic terms involved when discussing foreclosure. The mortgage is a loan, usually borrowed from a bank or other financial institution who is called the lien holder.
The borrower, also known as the mortgagor, uses the loan to purchase the property and usually pays it back with interest. A foreclosure can occur when a borrower stops making payments on a property. The lien holder often wants to recoup the balance that is owed.
If a mortgage has an acceleration clause, it allows the lien holder to demand the entire debt payable as soon as the borrower misses a payment. However, most mortgages require the lien holder to send a notice to the borrower before this process begins.
Options to avoid foreclosure
The borrower may want to contact his or her financial institution to request a forbearance. This is one of several options to avoid foreclosure. This allows the borrower to delay payments, but eligibility may depend on the type of loan.
Loan modification may also be an option. This lowers the interest rate on the mortgage or extends the date for payment to reduce the payment amount.
Some people may also choose to sell the property privately, also known as a sale by owner. The sale will need to generate enough proceeds to pay off the mortgage and any other liens that may be on the property.
In some situations, the lien holder may also agree to a short sale where the home is sold and the lien holder agrees to accept less than full payment for the property.
It is important for borrowers to understand their obligations for repayment of the mortgage. An experienced attorney can provide guidance about their options under Ohio law.