Question

Many mortgage companies have included in their mortgage contracts the right to non-judicial foreclosure, meaning that if a mortgagee becomes delinquent under the terms of the note, the mortgage company can foreclose on the property without having to sue the mortgagee and obtain a judgment for judicial foreclosure. Do you think this nonjudicial foreclosure provision is fair? Is it good for the economy/business? Should it be allowed? Why or why not? Please remember to comment upon at least two other students' posts in addition to posting your own comment.

Answer 1

Solution

Meaning:

Foreclosure is a legal process where a creditor (i.e., a lender or mortgage holder) can repossess or sell property for the purpose of repaying the debt owed on that property.

• Yes. If lender fails to bid fair market value for home at foreclosure sale, borrower can use this as a defense against the deficiency judgment claim. Yes, but amount that may be recovered is limited. ... Not allowed for non judicial foreclosures if the property is residential and owner-occupied.

• Foreclosure acts on the economy in a variety of ways on the local, state and national levels. Individual homeowners are hurt by foreclosure, of course, but it also may depress property values as well as local, state and national tax revenues.

• Yes, it should be allowed

Mortgage holders can foreclose on a property any time after the borrower starts to miss payments on the mortgage, unless otherwise set out in the mortgage or in the state where the property is located. Although state laws vary, in general, foreclosure involves the following steps:

• The mortgage holder gives the defaulting homeowner a written notice of default. A written default of notice is a letter providing formal notice that the mortgage holder has fallen behind on their payments and is in default.

• The homeowner is given a limited period of time where they have a chance to cure the default and pay all amounts due, including interest, penalties, attorney charges and any other fees allowed by the law or the mortgage.

• The lender may pursue judicial foreclosure (which involves filing a lawsuit in a court) or non-judicial foreclosure depending upon the laws of the state where the property is located. Some states allow for both: California, for instance, allows for a non-judicial foreclosure process or a judicial foreclosure process, though the nonjudicial foreclosure process is more commonly used in the state, according to its judicial branch.

• If the time allowed for the homeowner to cure the default has passed, the mortgage holder will probably give notice of a foreclosure sale.

• The property may be sold at a public auction where the highest bidder can purchase the property, or the lender may purchase the property and sell it later in a private sale.

• An unlawful detainer suit will be filed to evict the property owner if he is still living on the property after the sale.

The length of time a foreclosure process takes can vary significantly. State laws and the mortgage holder’s motivation are two major factors. In many cases, the foreclosure process will start three to six months after they’ve missed their first payment.