Foreclosure process might vary as per the local legislation but on a broader term the common steps uniform in all states will be discussed in this article. In case you encounter foreclosure you need to be well versed in state’s laws and practices.
Start of foreclosure process
It is very unlikely that you get foreclosure notice with single unpaid payment since lenders and banks give grace period margin with penalty imposed on total payable amount. You will be frustrated with frequent call when your second payment goes due. Lender might refuse any partial payment. The gravity of matter increases after three months of non-payment. The lender may pursue either course of action out of judicial sale or power sale. Judicial sale is allowed throughout US but power sale is allowed only by 29 states. Judicial sale is slower as compare to power sale.
Judicial sale and power sale
- A suite will be filed against you at the court by mortgage lender
- Court will demand you to pay due amount. Correspondence is done via court order letter
- You will be given time period of 30days if you want to deter foreclosure
- The lender can ask to auction property for carrying out sale, this is normally done at the end of payment period when judgement is entered
- After several months have passed the judgement, sheriff’s office can now carry auction
- You are required by statute to vacate your dwelling once auction is completed by sheriff’s office ad you have been notified to evict the house
Power of sale
- Papers demanding payment will be furnished by mortgage lender
- On expiry of grace period, a deed of trust is drawn up that delivers property to a trustee for short period of time
- Trustee will act as lender’s agent and will carry auction on his behalf
- Judicial review is required several times to ensure compliance with legislation
- The lenders need to post public notice for prior initiating auction for sale of property.
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