Voluntary Foreclosure


DEFINITION of 'Voluntary Foreclosure'

A voluntary foreclosure is a foreclosure proceeding that is initiated by the borrower, rather than the lender, in an attempt to avoid further payments. A foreclosure is the procedure that permits a lender, in the event of a loan default, to have the mortgaged property sold in order to cover some or all of the remaining debt.

BREAKING DOWN 'Voluntary Foreclosure'

A voluntary foreclosure occurs when a borrower knows that there will be no way to make future payments on a mortgage, and informs the lender of such to initiate the foreclosure process. While still harmful to credit ratings, a voluntary foreclosure can be cost effective for some borrowers who, rather than barely making payments each month (and knowing in the near future that even this will become impossible) conclude that they will be unable to continue with payments. Reasons for voluntary foreclosure include the sudden and unexpected loss of a job; or the realization that one is living beyond one's means, and the desire to become more financially stable (by living within one's means).

  1. Foreclosure - FCL

    A situation in which a homeowner is unable to make principal ...
  2. Mortgage

    A debt instrument, secured by the collateral of specified real ...
  3. Delinquent Mortgage

    A mortgage for which the borrower has failed to make payments ...
  4. Involuntary Foreclosure

    When a borrower defaults on a home mortgage loan and the lender ...
  5. Deficiency Judgment

    A judgment made by a court against a debtor indicating that the ...
  6. Decree Of Foreclosure And Sale

    A declaration made by a court indicating that a piece of property ...
Related Articles
  1. Home & Auto

    Foreclosure Opens Doors For Real Estate Investors

    Learn how to spot hot properties that you can turn around for a profit.
  2. Budgeting

    5 Signs That You're Living Beyond Your Means

    Learn what to watch for before you find yourself drowning in debt or filing for bankruptcy.
  3. Options & Futures

    Short Sell Your Home To Avoid Foreclosure

    Are you in danger of losing your home? Protect your credit score with a real estate short sale.
  4. Personal Finance

    Avoiding Foreclosure Scams

    If you want to save your home, avoid bogus offers and take matters into your own hands.
  5. Budgeting

    Are You Living Too Close To The Edge?

    If a missed paycheck will make your finances cave in, you must learn how to make proper supports.
  6. Home & Auto

    The Pitfalls Of Buying A Foreclosure House

    Find out if the house you're eyeing is really a good deal.
  7. Options & Futures

    Avoid Foreclosure: How To Handle An Underwater Mortgage

    Foreclosure is the biggest fear of any struggling homeowner. These tips just might save your credit rating.
  8. Home & Auto

    Your Mortgage: When It's Time to Walk Away

    Mathematically speaking, walking away can sometimes be the most prudent choice. Find out how to run the numbers.
  9. Savings

    How Parents Can Help Adult Children Buy a Home

    Owning a home isn't easy thanks to stringent lending standards. Thankfully, there's ways parents can help their kids buy a home.
  10. Credit & Loans

    HARP Loan Program: Help for Underwater Mortgages

    If you are underwater on your mortgage, this program may be just what you need to help build up equity in your home.
  1. Can FHA loans be used for investment property?

    Federal Housing Administration (FHA) loans were created to promote homeownership. These loans have lower down payment requirements ... Read Full Answer >>
  2. Do FHA loans have private mortgage insurance (PMI)?

    he When you make a down payment from 3 to 20% of the value of your home and take out a Federal Housing Administration (FHA) ... Read Full Answer >>
  3. How many FHA loans can I have?

    Generally, the Federal Housing Administration (FHA) does not insure more than one mortgage per borrower. This is to prevent ... Read Full Answer >>
  4. Are FHA loans assumable?

    Loans insured by the Federal Housing Administration (FHA) on or after Dec. 15, 1989, are assumable by qualifying borrowers. ... Read Full Answer >>
  5. How accurate are online mortgage calculators?

    Online mortgage calculators are accurate to the extent that the calculator itself is asking for the right pieces of information ... Read Full Answer >>
  6. Are mortgage rates negotiable?

    Mortgages are just as negotiable as any other product or service. Whether it's a new home purchase or refinancing of an existing ... Read Full Answer >>

You May Also Like

Hot Definitions
  1. Barefoot Pilgrim

    A slang term for an unsophisticated investor who loses all of his or her wealth by trading equities in the stock market. ...
  2. Quick Ratio

    The quick ratio is an indicator of a company’s short-term liquidity. The quick ratio measures a company’s ability to meet ...
  3. Black Tuesday

    October 29, 1929, when the DJIA fell 12% - one of the largest one-day drops in stock market history. More than 16 million ...
  4. Black Monday

    October 19, 1987, when the Dow Jones Industrial Average (DJIA) lost almost 22% in a single day. That event marked the beginning ...
  5. Monetary Policy

    Monetary policy is the actions of a central bank, currency board or other regulatory committee that determine the size and ...
  6. Indemnity

    Indemnity is compensation for damages or loss. Indemnity in the legal sense may also refer to an exemption from liability ...
Trading Center