Repossession
Repossession in the property market refers to the process by which a lender takes back ownership of a property due to the borrower's failure to keep up with mortgage payments. This legal action is typically the last resort after all other attempts to recover the owed amounts have failed.
What is Possession?
In the context of the property market, repossession occurs when a homeowner defaults on their mortgage payments, leading the lender to enforce their legal right to seize and sell the property to recoup the outstanding debt. This process is initiated after continuous non-payment despite various warnings and attempts to resolve the issue, including payment plans and negotiations.
Repossession has significant implications for both the borrower and the lender. For the borrower, it results in the loss of their home and negatively impacts their credit rating, making it more difficult to secure loans in the future. For the lender, while it allows recovery of the unpaid loan, the process can be lengthy, costly, and may not always cover the full amount of the outstanding mortgage, especially in a declining market.
The repossession process involves several legal steps, including notification to the borrower, court proceedings, and eventually, eviction if the court grants a repossession order. Governments and financial regulators often have measures in place to protect homeowners from premature repossession, encouraging lenders to explore all possible alternatives before taking this step.
Frequently Asked Questions
Repossession is a term that you may have heard before, but you might not be sure what it means. Here are some common questions and answers to help you understand what it means.
