Foreclosure

A legal proceeding for the collection of debt owed under real estate mortgages, deeds of trust and other types of liens on real property, which result in extinguishing the rights of the debtor (homeowner) in the real property. Unpaid debts are ordered to be paid through the sale of the property at public auction.

The process from commencement of legal proceedings through completion of sale and conveyance by the local authority to the buyer is called foreclosure.

There are two types of foreclosure. They are

1. Judicial Foreclosure

2. Non-Judicial Foreclosure

Judicial Foreclosure

A judicial foreclosure is a foreclosure which results from a court action rather than from the power of sale given to a trustee. There are basically two reasons that a Judicial Foreclosure is needed, but many circumstances that lead up to it. The two reasons are:

1. When a deed of trust or mortgage does not have a power of sale clause, thus compelling the lender to take the borrower to court for non—payment if the note.

2. When a judgment creditor commences a separate court action to

foreclose their judgment lien.

Non-Judicial Foreclosure

A Non-Judicial Foreclosure is a process through which a deed of trust or some forms of mortgages are foreclosed without a judicial action (court action). The trustee is given the ”power of sale’’ or right to sell the property if the trustor does not make the required payments to the loan limit.