FORECLOSURE

If a home owner fails to pay the regular mortgage payments, the lender will call for a shot to obtain a court order to terminate the authority over the property. The lender will claim the possession of the property securing the loan in order to sell it. Since foreclosure is at court level, proceedings can be either judicial or non judicial, but depends on many aspects.

The process under judicial foreclosure, the lender must litigate against the owner to get a court order. This order is to foreclose the property but only applicable if there is no such power of sale existing at moment or deed of trust in the mortgage. Once the court proclaims a foreclosure, the property is set for public sale and sold to the highest bidder. As a rule under this process, deficiency judgment can be sought by the lender but under specific conditions and the property can be redeemed by its owner for a maximum of one year.

If the property that is subjected for foreclosure does have an existing power of sale or deed of trust, then Non-Judicial foreclosure is applicable. Within the clause of Power of Sale states that the property owner is also allowed in selling the property to pay off the outstanding balance to the lender on the event of default. On the other hand, under this deed of trust where power of sale is presented, the lender has the power to put the property in the market and can be carried out by the lender itself, or by authorizing someone as their representative. They are termed as trustee. Policies for non judicial foreclosure are stated under the Power of Sale Foreclosure Guidelines.

In this framework, once the deed of trust comprises a power of sale clause and denotes the time element, place and conditions of sale, then they must adhere to its specific procedure. If not, non judicial foreclosure with power of sale clause is executed as it is supposed to be. How does it work? Notification of sale must have (1) a record in the county where the property is situated for at least 14 days prior to the sale. (2) It must be mailed by a certified for authentication purposes, return receipt requested to the borrower for at least 20 days prior to the sale. (3) It must be posted in the property for at least 20 days before the sale. (4) It must be also posted in a single public place, anywhere within the county where it is to be sold.

The notice must include details such as the time and place of the foreclosure sale, plus the exact address of the property, the trustee’s name, address and contact number and of course, a declaration that such property is going to be sold for public bidding. The debtor or the borrower has a maximum of five days before the day of sale as a grace period to halt the process of foreclosure. The auctioning is done between 9am to 5pm and should take place at the place specified in the notification of sale. The representative or the trustee might require proof from the bidders if they can actually pay their bid amount in full.

Anybody can place their bid, but the property is being sold definitely to the highest bidder. If it is needed, the auction may be deferred by announcement at the time and place of the foreclosure sale. After a non-judicial foreclosure sale, the lender may not petition for a deficiency judgment and the owner or the borrower has no privileges of redemption.