What is a foreclosure and sale decree?
A foreclosure and sale decree, sometimes simply referred to as a foreclosure decree, is a statement made by a court indicating the amount of unpaid debt a borrower is in default on and that their property will be sold to cover the unpaid debt. These statements are required by law in some states for a lender to proceed with a foreclosure.
Key points to remember
- A foreclosure order is a court order declaring that a property will enter the process of foreclosure, a default on a mortgage, when borrowers fail to make their payments for an extended period.
- A foreclosure and sale decree must be made in accordance with all local laws and regulations, but some states do not require a foreclosure and sale decree, allowing the lender to make the home available for sale at any time.
- Some states also allow a right of redemption, which allows homeowners to pay a set amount to buy back their mortgage and keep their home.
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Understanding foreclosure and sale decrees
Lenders foreclose properties when the borrower fails to repay their loan after failing to make payments for an extended period. When a borrower gets a mortgage to buy a home, the property serves as collateral for the loan.
If the borrower defaults, the lender takes possession of the house and forecloses on the property. Foreclosed homes tend to be auctioned off at sheriff’s sales. The proceeds from the sale of the house go to the mortgage lender to recover the cost of the loan.
A foreclosure and sale decree must be made in accordance with local laws and regulations and the terms of the associated mortgage. When the decree is made, the borrower receives written notice of the unpaid debt and that the property is to be auctioned. The amount recovered from the auction is used to cover interest and principal overdue, as well as legal bills from the lender.
Redemption rights with a foreclosure and sale decree
Some states give borrowers a right of redemption. This right allows homeowners in foreclosure to pay a set amount of money to redeem their mortgages in order to keep their homes. A fair buyback right allows homeowners to buy back their mortgages by paying off the entire mortgage balance before a foreclosure sale. This can be done by refinancing if the borrower is able to secure a new mortgage.
Some states provide a statutory right of redemption, which allows homeowners to redeem their mortgages after the foreclosure sale by paying the home’s foreclosure sale price, plus interest and fees, to its buyer. This way, they can repossess their home.
There are many programs offered by the US Department of Housing and Urban Development that help homeowners facing foreclosure. Some of them include programs to refinance at a lower interest rate, thus reducing the monthly mortgage payment. Other programs help people who have lost their jobs and have no income to pay their mortgage.
With any right of redemption, the borrower must act to redeem their mortgage within the time period specified by local law, and it is always advisable to contact your bank first before several payments have elapsed to find a resolution before ‘a foreclosure and sale decree has not been issued. been issued.
Alternatives to a foreclosure and sale decree
Some states do not require judicial foreclosures. In these states, lenders are not required to obtain a foreclosure order through the court system. Instead, they can alert the borrower and the public to the foreclosure through other means.
This could be a notice of default followed by a notice of sale, a notice of sale specifying an auction date, or simply the publication of a notice of sale in a newspaper. In states with non-judicial foreclosures, the foreclosure process generally works faster than in states requiring a foreclosure order issued by a court.
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