Unformatted text preview: tion, a mortgagee may foreclose within four years of delinquency or maturity of the mortgage contract. Foreclosure is by “judicial sale.” The steps involved are: Complaint is filed. Trial is held. Court issues a decree of foreclosure and an order of sale. Sheriff or court commissioner auctions property after legal notice has been posted and published. Property is sold to the highest bidder at sale. Buyer at sale is issued a “certificate of sale,” but does not receive immediate title or possession. • If a deficiency judgment is possible, the property is sold subject to the “right of redemption.” The mortgagor may have a three–month right of redemption (or “equity rights of redemption”) if the sale proceeds are sufficient to pay the secured indebtedness plus interest and costs of foreclosure, or a one year right of redemption (or “statutory rights of redemption) if the sale
Dynasty School (www.dynastySchool.com) 8-9 REAL ESTATE FINANCE
proceeds are not sufficient to satisfy the secured indebtedness with interest and costs of action and of sale. • Mortgagor may remain in possession during “redemption period,” which could be up to one year. At the end of the redemption period, a “sheriff's deed” is issued to the new owner of title. POWER OF SALE CLAUSE
This clause in a mortgage makes foreclosure out of court possible, using the same procedures as a trustee's sale under a trust deed (non–judicial sale). Power of sale clause will be discussed in detail in this chapter under Loan Clauses. DEFICIENCY JUDGMENT
If the sale proceeds do not fully satisfy the debts secured by the mortgage, a deficiency judgment may be granted by the court against the debtor. However, deficiency judgments are prohibited on a: Mortgage given to seller for all or part of the purchase price. Mortgage given to a lender to finance purchase of an owner–occupied dwelling of 4 units or less. TRUST DEED
In real estate financing in California and some other states, a deed of trust is generally used along with a promissory note (evidence of debt) as a security device; it creates a lien on the property when record...
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This note was uploaded on 12/30/2010 for the course SOC 101 taught by Professor Zhung during the Spring '10 term at Punjab Engineering College.
- Spring '10