Foreclosure rights vary by jurisdiction and can be judicial or non-judicial. Lenders must follow specific procedures, and failure to comply can affect borrower’s rights. Borrowers have the right to defend against non-payment lawsuits and must receive notice in non-judicial proceedings. The power of sale clause allows lenders to sell mortgaged property in non-judicial proceedings, but they must follow specific procedures and give adequate notice to borrowers.
Foreclosure rights vary by jurisdiction. In general, there are two types of foreclosure: judicial and non-judicial foreclosure. Each type has very specific procedural requirements that must be met by the lender. Failure to comply with procedures will increase lead times and affect the borrower’s other foreclosure rights.
Judicial foreclosure gives the borrower foreclosure rights as set forth in the laws of the specific jurisdiction. This process is used when the mortgage or loan documents do not include the right to a non-judicial sale of the mortgaged property. The lender must sue the borrower in court for non-payment. If the lender wins the case, the lender acquires a court order for foreclosure on the mortgaged property.
Borrower foreclosure rights require that the lender sue the borrower for non-payment of the loan in question. The borrower must receive notice of the lawsuit. Upon successful receipt of the lawsuit notice, the borrower has a period of time to respond to the lawsuit demands. A number of exceptions are available to the borrower for the lender’s right to sue for non-payment. The borrower should review all available defenses with an attorney in order to present the best argument against foreclosure.
In a non-judicial foreclosure proceeding, the mortgage in question must contain a power of sale clause. This clause allows the lender to sell the mortgaged property in the event of default on the note. The clause is intended to allow the lender to recover any unpaid balance on the note. The power of sale clause of each mortgage sets out the specific terms associated with the terms and procedures to be followed in the event of a default.
A borrower’s foreclosure rights in out-of-court proceedings are such that the lender must explicitly follow the terms of the power of sale clause and give the borrower adequate notice at each stage of the process. When the mortgage does not specifically set the terms of the sale process, the lender must provide the borrower with a letter of demand for repayment of the unpaid mortgage balance within a period of at least 20 days. If the borrower does not repay the unpaid balance during the period specified in the demand letter, the lender must initiate the sale of the mortgaged property. The sales process includes scheduling a sale with the county clerk, posting that sale on the courthouse door, and notifying the borrower of the sale. All notices must give at least 21 days notice of the sale.
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