Methods Of ForeclosureThere are 2 methods of foreclosure on a property and the method used is based on the 2 types of security instruments that are used in the United States when a property is purchased and a mortgage is taken out for that property.
THE TWO METHODS OF FORECLOSURE JUDICIAL AND NON-JUDICIAL
Non-Judicial DEED Of TRUST State The basic purpose of a deed of trust, also referred to as a trust deed is the same as a mortgage. Real property is used as security for a debt; if the debt is not repaid, the property is sold and the proceeds are applied to the balance owed. There are three parties involved the borrower(trustor), the lender(beneficiary) and a neutral 3rd party (the trustee). When the lender makes a loan to the borrower the borrower gives the lender a promissory note and a deed of trust. The borrower conveys title to the trustee to be held in trust until the note is paid in full.
Many States allow a lender to foreclose on a mortgage without filing a lawsuit. If the trust deed contains a power of sale clause, the lender or trustee is authorized to sell the property and apply the proceeds to the debt, provided the notice of sale is properly advertised in the local newspaper.This method is also known as sale by advertisement.
Judicial Foreclosure, In order to initiate a judicial foreclosure the lender must file a lawsuit,(Lis Pendens) against the borrower, petitioning the court to sell the mortgaged property at public auction and apply the proceeds to the debt.
The Lis Pendens filed informs any potential buyers or lien holders of a pending foreclosure action. Once a Lis Pendens is filed a SUMMONS is served by a sheriff or process server to notify the mortgagor( borrower)named in the summons to appear in court to defend any action aginst them regarding the nature of the complaint. If the mortgagor(borrower) does not resolve the mortgage problem a SUMMARY JUDGEMENT or Foreclosure Judgement will be rendered against the borrower. This allows the courts to choose a date to direct the sheriff to seize and sell the property in satisfaction of the judgement. This is a basic overview of the process involved in a foreclosure the information presented here is not intended to replace the advice of your attorney. Below you will find a link to the list of the 50 states and the type of security instrument used. Click Here for The 50 State List |