![]() This bid is called a credit bid because the mortgage holder doesn’t have to pay cash at the auction if its winning bid is less than the borrower’s loan balance. The lender may have a representative there who starts the bidding with a small bid of up to 30% of the property’s equity. In a nonjudicial foreclosure, the mortgage holder doesn’t have to file a lawsuit at all, but the lender must still provide notices and observe waiting periods that are required by state law and the mortgage loan documents.įoreclosed properties are typically auctioned off at a sheriff’s sale. The mortgage holder files a lawsuit in a strict foreclosure as well, but in that case, the real property transfers immediately to the lender. The judgment allows them to sell the property. In a judicial foreclosure, the mortgage holder files a lawsuit against the borrower and gets a court order called a judgment. The Foreclosure Process Varies by Stateĭepending on the state, the foreclosure may be judicial, strict, or nonjudicial. The foreclosure process differs by state. Lenders are allowed to do this because mortgages are secured loans, and the house is the collateral. The lender recovers the money by taking and selling the real estate, often at an auction. What Is a Foreclosure?įoreclosure is a legal process that allows lenders to recover the money they loaned through a mortgage when a borrower doesn’t make their mortgage payments. If the mortgage holder receives more money from the sale than what the borrower owed on the property, the former property owner is entitled to receive these surplus funds. If borrowers can’t make their loan payments as promised, the mortgage holder has the right to foreclose on the property, repossess the home, and sell it. Many homeowners use mortgage loans to purchase their homes. #FORECLOSURE ACTION SURPLUS MONIES FORM HOW TO#The Foreclosure Process Varies by Stateįoreclosure Surplus Funds: What They Are & How To Claim Them. ![]()
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