A mortgage for an apartment, by its legal nature, is a pledge agreement for the acquired real estate. Therefore, in case of non-payment of monthly payments, the credit institution will be able to foreclose on the purchased apartment or house.
Borrowers under mortgage agreements often ask questions about the consequences of not meeting the obligation to make monthly payments. It should be borne in mind that a credit institution has several effective levers of influence on the payer. This is due to the legal nature of the mortgage agreement, which is an agreement on the pledge of real estate. Taking into account the above, real estate is a security for the borrower's fulfillment of the obligation to make periodic payments, to fully repay the debt in a timely manner. In case of non-fulfillment, improper fulfillment of this obligation, the bank can foreclose on the acquired real estate and cover its expenses at the expense of the proceeds.
Consequences of improper performance of obligations under a mortgage agreement
If the borrower under the mortgage agreement allows only small or not too frequent delays, then the most difficult consequence for him will be the need to pay fines to the bank. Practice shows that credit institutions are loyal to such problems, since the contractual penalty covers all losses that may arise as a result of delay. Foreclosure on the subject of a pledge is an extreme measure that is used in case of chronic or persistent non-payments, as well as in the absence of any other ways to settle the borrower's debt. Civil law allows foreclosure on pledged property subject to the conditions of a three-month pass of mandatory payments and the presence of debt, which is at least five percent of the total amount of the obligation.
The order of foreclosure on pledged property
If there are sufficient grounds described above for foreclosure on real estate, the credit institution applies to the court with a corresponding claim. It is possible to collect a debt at the expense of a dwelling only by a court decision, therefore this appeal is mandatory. After satisfying the declared requirement, the subject of the mortgage is sold. The creditor takes the proceeds from the sale to himself as repayment of the debt, and if there is any balance, returns it to the former owner of the property. If the proceeds are not enough to settle the entire debt, then the law allows collection to be levied on other property of the debtor.