The foreclosure process as applied to residential mortgage loans is a bank or other secured creditor selling or repossessing a parcel of real property after the owner has failed to comply with an agreement between the lender and borrower called a "mortgage" or "deed of trust". Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that "the lender has foreclosed its mortgage or lien". If the promissory note was made with a recourse clause then if the sale does not bring enough to pay the existing balance of principal and fees the mortgagee can file a claim for a deficiency judgment.

The objective of mortgage insurance is to protect homeowners from losing their homes through offering the necessary funds to stay even with the monthly payments when they become distressed. It usually starts payments instantly following the processing of the home owner’s claim though the claim was approved subsequent to the event that gave rise to the trouble. The majority of people obtain mortgage insurance to get security in case there is a severe illness, unemployment or an accident. Most of the time, mortgage insurance would even compensate for payments not made prior to the processing of the claim to save the credit of homeowners.

If you are falling behind on you mortgage payments, your lender generally will continue to send you statements indicating that you are late, showing the balance, and trusting that you will see the urgency of the situation and get caught up. This is the ideal time to act, before a default is recorded by the lender. Prior to foreclosure, your credit may still be good enough to refinance using a conventional mortgage option, and it is advisable to take whatever steps necessary to reduce the required minimum payment as much as possible, pay off other debts, and generally make it easier to pay your mortgage.

Those facing foreclosure on their homes should keep in mind that a foreclosure hurts not only the debtor, who loses the property, but also the lender and the economy as a whole. Private mortgage insurance helps to insure a lender against a borrower's default.

Preventing Foreclosure

A private mortgage insurance policy does not automatically prevent a foreclosure. Actually, most policies only become active after the lender has filed for a foreclosure. If you have mortgage insurance, it will probably not help you avoid the problems associated with defaulting on a loan. Some types of mortgage insurance will pay your previous debts, bringing your mortgage up to the present month and allowing you to resume making payments. If the lender has not fully completed the foreclosure process, this could save your home, but the best way to avoid foreclosure is to make reliable payments, not depend on insurance.

If you have further query please contact Canada Insurance Plan.