We have all seen the news telling us about the record number of foreclosures and heard the gloomy forecasts that there is no end in sight but what is a foreclosure? Maybe you have seen notices attached to doors in your neighborhood, boarded up and vacant homes or signs offering foreclosed property for sale but that does not help you understand foreclosure.
We can start by defining the term foreclosure.
A foreclosure is a legal action, either judicial or non-judicial, legal action that allows the holder of the mortgage to remove an individual from the property and then sell the property in order to pay off the loan of the individual in default.
Foreclosure laws vary from state to state and can determine whether a foreclosure action can be a judicial or non-judicial process.
Whether a foreclosure is judicial or non-judicial they are subject to state law but must comply with the Federal Credit Reporting Act.
Judicial foreclosures take place in a court of law.
The lender files a complaint in court.
These complaints contain information about your debt, why they feel they are entitled to take possession of and sell the property.
The homeowner must then be served notice of the action against them.
This notice will also tell you when and where to come to court.
If the court finds the lender has the right to foreclose and that the debt is valid an order for the amount owed plus costs will be issued that allows law enforcement carry out the eviction of the defaulting homeowner and the sale of the property.
Non-judicial foreclosures take place without the oversight of the courts.
While these sorts of foreclosures must also comply with the law there is a difference in the process.
If a default occurs the homeowner may receive a notice by mail usually called a Notice of Default.
If the homeowner cannot pay the amount of the default in the time prescribed by law a Notice of Sale will be mailed and a sale to satisfy the debt will be ordered.
The homeowner will be evicted and the sale will occur.
It is important to remember that because laws vary from state to state some of the terms in the notices delivered to the mortgage holder may be different from those used in this description.
Pay close attention to any information you receive from your lender.
Do not lose your home because you failed to open and read your mail.
Whether you are facing a judicial or non-judicial foreclosure a lawyer who is familiar with the intricacies of both state and federal laws can help you understand what foreclosure is and what rights and responsibilities are in foreclosure.