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Your letter should start with an introduction of who you are and what kind of loan you are applying for. Lead into your story with something like "We want to explain our foreclosure from six years ago." Then, launch right into the details that led you to lose your home. This is not the time to be shy or modest.
Foreclosure definition Foreclosure occurs when a homeowner can't make mortgage payments and the bank seizes the home, which was acting as the collateral or security on the loan. The bank then sells the home to try to recover their losses.
Notice of Default and Foreclosure. Technically speaking, a notice of default is not a foreclosure. Instead, it serves as notice that you are behind in your payments and that your property may be sold as a result of foreclosure if you don't act soon.
Your mortgage letter of explanation should address any issues your lender has asked you to clarify, such as missed payments, an employment gap, or a bankruptcy. Explain why the situation happened, how you corrected it, and how your financial situation has changed since that time.
When a borrower repays the entire outstanding loan amount in one payment rather than in EMIs, they need to write a letter for the foreclosure of the loan, which is known as the foreclosure letter.