Today the issue of foreclosure is of great importance because of the astronomical increase in numbers right across the country. More than 4% of all the houses are in foreclosure. There is a desperate scramble to find out causes and remedies.

Broadly speaking there are two types of foreclosures – the Mortgage Foreclosure and the Trust Deed Foreclosure.

Mortgage foreclosure starts with a formal demand for pending dues being made by the lender to the borrower in the form of letter known as the NOD or notice of default. Depending on the location of the unit, the notice will be issued usually 90 days after the last payment has been made. Couched in formal terms this notice is a silent threat to sell the property by taking away all rights from the owner. Eventually it leads to eviction. Mortgage foreclosure can be done only through the court. It is also known as judicial foreclosure.

Nearly half the states allow for mortgage foreclosure for lenders to realize unpaid dues. Until dues are cleared the title deed or lien remains with the lender. Like any other lawsuit it starts with summons to the borrower or to any other body having inferior rights to the property. The attorney representing the lender files the complaint in the court. From the day notice issue the respondent has 20 days to reply to the court that has sent out the challenge. The court in turn has 40 days after receiving the reply to give back an answer. Each correspondence will deal with specific sections of the complaint. This ping-pong game of swinging back and forth might go on for quite some time slowing down the mortgage foreclosure process. It might even drag on for a year. For the lender court proceedings translates into wastage of time, dollars and energy.

A Trust Deed Foreclosure skirts the courts. It is referred to as action by the third party. Here the borrower is referred to as the trustor, the lender is the beneficiary and the third party holding the title or the representative of the lender as the trustee. The latter is there only for holding the title of the property as security against the loan sanctioned. Since there is no mention of the court, the trustee has the right to dispose of the property by selling it on behalf of the beneficiary if and when the trustor lags behind in payment.

Here too the first step will be for the trustee to issue a NOD. Generally 90 days grace will be permitted for the defaulter to become current. Once that period is over, things become nasty for the borrower. A sale notice will be pasted on the main entrance of the house and advertisements regarding sale will be inserted in newspapers. The actual sale will take place three weeks after these latter steps have been taken. Auctions will he held on the steps of the courthouse and the highest bidder will win the prize. Here action is swift unlike the court proceedings.

By: Kevin Simpson

About the Author:

MP3 Player Accessories