Understanding Foreclosure
Understanding foreclosure information is important. Sometimes it can feel overwhelming, so I’ve included some basic information so you can wrap your head around the idea and understand foreclosure a little better. Foreclosure happens when a borrower doesn’t make payments and the lender tries to recover the property. The typical process starts with a missed payment and ends up with the sale of the property. Foreclosure laws vary from state to state usually in the type of documentation required and in the time limits surrounding a foreclosure. Some federal laws can also have an impact. So, if you’re facing a foreclosure it is extremely important for you to understand the laws of the state where your property is located.
Most states require that a public notice is posted announcing the foreclosure proceedings and the sale. These are usually posted in the classified section of the local newspaper. Anyone who may be a beneficiary of the sales of the property must also be notified. For example, if you took out a home equity loan from a bank other than your primary mortgage lender, that bank would be a lien holder of your property and must be notified of the property foreclosure sale. They will need to be paid once the proceedings and sale are complete.
Two types of processes that most states use are judicial sale and foreclosure by the power of sale. Obviously the courts are involved in a judicial sale and all of the proceedings are conducted through the governing court. Judicial sales can be excruciatingly slow due to the legal process operating at a snail’s pace. Foreclosure by the power of sale is a much faster process and is conducted by the lending institution. Depending on the state in which your property is located you may have one or both types of foreclosure processes.
Other types of foreclosure procedures are statutory redemption and acceleration. About half of the states use statutory redemption and it allows the property owner to resume ownership of their property even after the sale. The owner has about six months to a year to act and must pay the purchasing amount plus applicable fees in order to reclaim the property. Acceleration is the method used to determine the amount owed on the property. This allows the lender to request the full loan amount as soon as the mortgage is in default.
Bankruptcy is a federal law that can affect the foreclosure as well. It stops the foreclosure and clears the debt once the process is completed. The Soldiers and Sailors Relief Act is another law that provides protection to active duty members of the armed forces. This type of foreclosure can only go through the judicial process and a judge determines whether or not to proceed with the foreclosure or wait until the active service member returns from deployment.
Foreclosure laws vary greatly, so it’s imperative to seek legal counsel if you’re confronted with foreclosure on your property. Even bankruptcy laws have changed recently and may reduce your level of protection. Being aware of your legal rights and having proper legal representation during a foreclosure proceeding is highly advised and may save your property and your credit rating.
Originally posted 2009-04-18 08:42:04. Republished by Old Post Promoter
