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Judicial foreclosure available: Yes
Non-Judicial foreclosure available: Yes
A lender must file a lawsuit and undertake judicial foreclosure
unless the loan is covered by the Deed of Trust Act, which allows
non-judicial foreclosure. However, the Deed of Trust Act applies only to
business and commercial loans on real estate in excess of $500,000 and
then only if the borrower agreed, in writing, to the deed of trust
arrangement. Otherwise, in a typical foreclosure on a house, whether
under a mortgage, trust deed or deed of trust, the lender must arrange
to file a lawsuit, win a judgment ordering foreclosure and arrange a
foreclosure sale in the manner required by law.
Judicial Sale
Once the lender wins a judgment, then it can go ahead and arrange to
sell the property to pay off what the borrower owes, in accordance with
the court judgment. A notice of sale must first be given, then a sale
can take place in 30 days.
Contents
The notice of sale should specify the date, time and place of sale.
It should also give a legal description of the property.
Advertising
The notice of sale must be published once a week for four consecutive
weeks. The last ad must be published at least three days before the
foreclosure sale.
Cure
The borrower may prevent the foreclosure by paying the amount of the
judgment.
Time
The sale may not take place until 30 days after the date the court
grants a judgment in favor of the lender.
Manner
The property will be sold to the highest bidder. However, if the sale
fails due to lack of bidding, then the property may be offered again for
sale any time before the return date on the writ of execution issued by
the court to enforced its judgment.
Redemption
After the sale, the real estate may be redeemed by the former
borrower or owner by paying, at any time within nine months from the
date of sale, the amount of the successful foreclosure bid, with
interest at 10 percent a year, plus taxed and costs. The parties may
agree to a shorter term, but not less than one month. For good cause,
however, the court can increase the period to not more than nine months.
Once the borrower files the suit for redemption and serves it on the
lender, the lender has 30 days to respond. Sometime after the response,
or by default, the court will hold a hearing to determine the amount of
money necessary for redemption. At the conclusion of the hearing, the
clerk of the court will issue a certificate of redemption.
Deficiency
A lender may obtain a deficiency judgment. The matter is unregulated
by statute.
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