As a result of the recent collapse of the real estate market, the word "foreclosure" has unfortunately become an often used word in the English language. This article contains information about types of foreclosures and how the process works.
In the context of real estate law, foreclosure is the legal process by which a real property lender recovers possession of the real property that secures its loan. Much like the repossession of a car or furniture when the borrower does not pay, foreclosure allows the real property lender to take back the property.
The lender can do this because as part of its agreement to loan money to the homeowner it was is given a voluntary lien by the homeowner which the bank can enforce should the borrower not pay as agreed.
The most frequent type of of foreclosure is known as a "non - judicial" foreclosure. This type is pursuant to the power of sale clause contained in a mortgage or deed of trust. This method is the most common type of foreclosure because unlike a "judicial" foreclosure no court action or judicial proceeding is required. In the state of California, virtually every foreclosure is a "non - judicial" foreclosure because it takes very little time and money to take back the property from the borrower.
A "non - judicial" foreclosure process involves the sale by the mortgage holder without court supervision. This process is fastest and cheapest way for the lender to terminate the rights of the homeowner and in some states can take less than six months.
A" non - judicial" foreclosure culminates in a trustee's sale. At the trustee's sale the real estate will be auctioned to the highest bidder. Should bids not be forthcoming the property will revert to the lender whose loan is in default. If there are bidders, the foreclosing bank can keep the proceeds pay off its loan and any legal costs. Amounts in excess of the lender's loan will be used to pay off junior or subordinate liens. Should there be a balance after the payment of all liens it will be paid over to the borrower.
Foreclosure by court, commonly known as a "judicial foreclosure," is available in every state and in some states is required. This involves a legal action in which the lender files a lawsuit that asks for a sale of the real property. As with other court actions, constitutional dictates of "due process" allow a homeowner to answer the lawsuit and present legal defenses. At the conclusion of the case a decision is made in favor of either the lender or borrower. Should the lender prevail, the property is sold with the proceeds going to satisfy the foreclosing lender; then other lien holders; and, finally, the mortgagor/borrower.
Additional information about foreclosure can be found by consulting a real estate attorney in your area or logging on to the website of attorney Mitchell Reed Sussman at http://www.palmspringslitigationattorney.com
In the context of real estate law, foreclosure is the legal process by which a real property lender recovers possession of the real property that secures its loan. Much like the repossession of a car or furniture when the borrower does not pay, foreclosure allows the real property lender to take back the property.
The lender can do this because as part of its agreement to loan money to the homeowner it was is given a voluntary lien by the homeowner which the bank can enforce should the borrower not pay as agreed.
The most frequent type of of foreclosure is known as a "non - judicial" foreclosure. This type is pursuant to the power of sale clause contained in a mortgage or deed of trust. This method is the most common type of foreclosure because unlike a "judicial" foreclosure no court action or judicial proceeding is required. In the state of California, virtually every foreclosure is a "non - judicial" foreclosure because it takes very little time and money to take back the property from the borrower.
A "non - judicial" foreclosure process involves the sale by the mortgage holder without court supervision. This process is fastest and cheapest way for the lender to terminate the rights of the homeowner and in some states can take less than six months.
A" non - judicial" foreclosure culminates in a trustee's sale. At the trustee's sale the real estate will be auctioned to the highest bidder. Should bids not be forthcoming the property will revert to the lender whose loan is in default. If there are bidders, the foreclosing bank can keep the proceeds pay off its loan and any legal costs. Amounts in excess of the lender's loan will be used to pay off junior or subordinate liens. Should there be a balance after the payment of all liens it will be paid over to the borrower.
Foreclosure by court, commonly known as a "judicial foreclosure," is available in every state and in some states is required. This involves a legal action in which the lender files a lawsuit that asks for a sale of the real property. As with other court actions, constitutional dictates of "due process" allow a homeowner to answer the lawsuit and present legal defenses. At the conclusion of the case a decision is made in favor of either the lender or borrower. Should the lender prevail, the property is sold with the proceeds going to satisfy the foreclosing lender; then other lien holders; and, finally, the mortgagor/borrower.
Additional information about foreclosure can be found by consulting a real estate attorney in your area or logging on to the website of attorney Mitchell Reed Sussman at http://www.palmspringslitigationattorney.com
About the Author:
Want to find out more about foreclosure. Visit attorney Mitchell Sussman's web site where you can find out all about real estate foreclosure and how to deal with it.
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