Foreclosures

A foreclosure is a legal procedure wherein a party who has loaned money protected by a mortgage or deed of trust on real property necessitates sale of the real property to retrieve the money due, unpaid interest and the cost of foreclosure when a debtor fails to make payment.  The lender can have a notice of default served on the debtor indicating the amount due and the amount required to repair the default after the payments on the promissory note have become delinquent for numerous months. If the debtor fails to pay the required amount within a specific period of time, the lender will set a date of foreclosure, therein making the property subject to public sale after the specified date. Up until this date, the default borrower may redeem the property by paying all required costs. If the property is sold, the owner of the judgment is paid the amount due and the remainder of the amount obtained from the sale, if any, is issued to the lender.

Various types of foreclosure exist such as judicial foreclosure in which the lender may bring suit for the foreclosure against the defaulting borrower for failure to pay amount due and force a sale. This type of foreclosure is often in deed of trust states when the amount due appears to be greater than the equity value of the real property, and the lender desires a deficiency judgment for the remaining amount due following the sale. Another type of foreclosure is statutory foreclosure or foreclosure by power of sale, in which a foreclosure takes place by act of a power of sale clause in the mortgage. Since the foreclosure must be completed in agreement with the statutory requirements prevailing such sales, there is no need for court action.