Foreclosure is perhaps the most trying thing that property owners can experience.  This is particularly true when it comes to home foreclosures.  The best way to avoid such an experience is for mortgage holders to keep up with their payments.  In the event of a foreclosure, however, it is helpful for individuals to understand the foreclosure process.

What exactly is a power of sale clause?
A power of sale clause is a term included in many mortgages and deeds of trust which gives lenders authority to sell property defaulted on by borrowers.  In most instances, a power of sale clause provides a specific procedure for sale which must be followed.  When property is foreclosed upon in this manner, it is called a non-judicial foreclosure because the lender can initiate the sale without involving the courts.  Property owners with powers of sale existing in their mortgages or deeds need to understand that they can lose their property by defaulting on the loan.

Can my property be foreclosed upon if a power of sale clause does not exist in the mortgage?
If no power of sale clause exists in a mortgage, lenders can utilize the judicial foreclosure process to sell a home.  This process involves petitioning the court to order a foreclosure.  In instances where the court declares a foreclosure, the home is sold by auction to the highest bidder.

What if my home is foreclosed upon and the foreclosure sale does not cover the amount owed to the lender?
It is sometimes the case that a home is foreclosed upon but the sale of the property does not cover the outstanding debt.  When this occurs, the lender can sometimes seek a deficiency judgment, which is essentially a court order directing the borrower to repay the outstanding balance of the mortgage.  It is critical for debtors to seek legal counsel if they have a deficiency judgment because a remedy may be available.

What does the foreclosure process look like?
Generally speaking, a mortgage or deed of trust will contain a power of sale clause which provides the foreclosure procedure.  If there is no power of sale clause, however, the non-judicial foreclosure process is as follows:

• The lender visits the county recorder’s office and records a notice of sale.
• The lender sends a copy of the notice of sale by certified mail to all parties to the mortgage or deed of trust.
• The lender has the notice of sale published in a local newspaper at least once a week for four consecutive weeks. The final publication must be within ten days of the scheduled date of sale.
• The lender sells the property at a cash auction to the highest bidder.
• The highest bidder has until the end of the next business day to pay the bid price.
• Upon completion of the sale, proceeds go to the lender, with any remaining proceeds going to junior lien holders.

Individuals who have their home or property foreclosed upon should immediately obtain counsel to seek a legal remedy. This way, borrowers can make certain to exhaust every possible option before forfeiting their home or property.