There are so many people who talk about foreclosure as if it is a singular thing. There are multiple aspects to foreclosure and we have extensive experience in dealing with all aspects of foreclosure. If you have additional questions please don’t hesitate to give us a call or an email and we will address specific questions.
Definition of Foreclosure from Dictionary
fore·clo·sure noun /fôrˈklōZHər/ foreclosures, plural The process of taking possession of a mortgaged property as a result of the mortgagor’s failure to keep up mortgage payments
Foreclosure is the legal process by which a mortgagee, or other lien holder, usually a lender, obtains a termination of a mortgagor’s equitable right of redemption, either by court order or by operation of law (after following a specific statutory procedure).[clarification needed] Usually a lender obtains a security interest from a borrower who mortgages or pledges an asset like a house to secure the loan. If the borrower defaults and the lender tries to repossess the property, courts of equity can grant the borrower the equitable right of redemption if the borrower repays the debt. While this equitable right exists, it is a cloud on title and the lender cannot be sure that it can successfully repossess the property. Therefore, through the process of foreclosure, the lender seeks to foreclose the equitable right of redemption and take both legal and equitable title to the property in fee simple. Other lien holders can also foreclose the owner’s right of redemption for other debts, such as for overdue taxes, unpaid contractors’ bills or overdue homeowners’ association dues or assessments.
The foreclosure process as applied to residential mortgage loans is a bank or other secured creditor selling or repossessing a parcel of real property (immovable property) after the owner has failed to comply with an agreement between the lender and borrower called a “mortgage” or “deed of trust”. Commonly, the violation of the mortgage is a default in payment of a promissory note, secured by a lien on the property. When the process is complete, the lender can sell the property and keep the proceeds to pay off its mortgage and any legal costs, and it is typically said that “the lender has foreclosed its mortgage or lien”. If the promissory note was made with a recourse clause then if the sale does not bring enough to pay the existing balance of principal and fees the mortgagee can file a claim for a deficiency judgment. (more)
Most people think foreclosure is just the Trustee Sale or also known as the Foreclosure Auction. The truth is foreclosure is a legal process. Here is a PDF that explains the process for nonjudicial foreclosure which is what most foreclosures are in California. My guess is less than .05% of homes in California are processed through judicial foreclosures so this shows the norm. Click on this link for a PDF you can print off. Nonjudicial Foreclosure
If you want to know more about how to cure a foreclosure or how to purchase a home while in the foreclosure process (short sale), at the trustee sale, or after the sale which is called REO or bank owned – we can help you with all these. Call and talk to McKay – he is the expert in our office on these.