Foreclosure Process

Summary:

Judicial Foreclosure     Yes

Non-Judicial Foreclosure     Yes

Security Instruments     Deed of trust, Mortgage

Right of Redemption     Yes, if no court confirmation of sale

Deficiency Judgments     Yes, unless waived

Time Frame     Usually 90 days, but may be one year

Judicial Foreclosure: In the absence of a power of sale clause in the loan document, the lender must sue the defaulted borrower and obtain a court order to foreclose. Unless the lender waives his right to a deficiency judgment, the sale will be held one year from the date of the order to foreclose. If deficiency is waived, the sale may be held in six months, or, if the property is abandoned, in two months. The sale may be held sooner by consent.

Non-judicial foreclosure process may be used if a power of sale clause authorizing the lender to sell the property to pay off the loan is included in the loan document. If the time, place, and terms of sale are specified, then that procedure must be followed. If not, the process is as follows:

1. The notice of sale must be recorded, served upon the borrower, and then published weekly for six consecutive weeks in a newspaper of general circulation in the county in which the property is located. If the borrower cannot be found, the notice must be posted conspicuously on the property and served on any occupant.

2. The sale will be held as a public auction at the time and place specified in the notice. The successful bidder receives a certificate of purchase. Postponement is permitted.

3. In the absence of court confirmation of the sale, the borrower has 12 months to redeem the property, but usually the lender will apply for court confirmation. If the lender states in his application his intention to sue for any deficiency balance, he may then sue for a judgment. Otherwise suits for deficiency balances are not allowed.

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