The Foreclosure Process in Cayman

Foreclosure comes about when a person borrows money from a lending institution to fund a piece of real property and have insufficient funds to pay the monthly mortgage payments. The bank or lending institution then applies to the court to sell the property to repay the outstand mortgage.

Many people mistake in thinking that lenders have will only sell the home for the outstanding balance of the mortgage. This is incorrect and illegal. How would you feel if you were paying a mortgage for 10 years out of the 20 year term that was required and then came in to financial distress and couldn’t pay your mortgage? The bank then sells your property for the balance thus giving away your 10 years of investment? The Cayman Islands laws require the lending institution to apply to the courts to sell the property and the sales price and a reserve price (price that the property cannot be sold below) is set by a judge.

 Many unfortunate situations can lead people into foreclosure. One problem is lenders making ARMs (Adjustable-rate mortgages) more attractive than they are. Once interest rates go up, borrowers find they are unable to pay.
Other unfortunate situations like divorce, job loss and failed business cause foreclosures.

During the pre-foreclosure phase, the bank or lender sends out several payment notices to the mortgagee. The lender/banks attorney files foreclosure papers through the clerk's office, if no outstanding mortgage payments are paid. At this point of time, a public auction is scheduled for the home in foreclosure.

If the property does not sell for a high enough price at the public action the property is then given to a Realtor to sell. I just happen to be a former banker and based on my knowledge with the banking process have had the privilege of handling at least 70% of the foreclosure properties in the Cayman Islands.  

It is important to always complete due diligence when planning to purchase any real estate investment. This process is one of the most important parts of buying or bidding on foreclosure. However I will be happy to advise you in the complete process.

copyright : Paul Aiken
Remax Cayman Islands
Grand Cayman