WHAT IS A FORECLOSURE?

Foreclosure is the judicial procedure through which a mortgage company can obtain a judgment against a delinquent borrower, and force the sale of a property at public auction.

A. THE FORECLOSURE COMPLAINT:

 The mortgage company must file a complaint in Court and serve the borrower a  copy of the complaint.

B. THE REDEMPTION PERIOD:

For most residential property, the borrower/homeowner has seven months to pay  off the loan in full after the date that he/she is served a copy of the complaint (by  refinancing or selling the home).  Homes that are vacant, and homes that are  currently worth less than ninety percent of the amount required to redeem may  have a shortened redemption period.

C. THE AUCTION:

If the loan is not paid in full (or otherwise settled) within the redemption period,  the Court will order that the property be sold to the highest bidder at a public  auction.  The Buyers at the auction must pay cash.  They must have ten percent  cash at the auction, and the successful bidder must have the balance of the  purchase price in cash within 24 hours.  Bidders at the auction must be cautious of potential liens on these properties that may not be extinguished through the  auction sale.  BUYER BEWARE!

D. THE DEED:

The County Sheriff will issue a deed to the successful auction bidder, provided all  necessary cash has been paid.  In the event that there are no bidders at the auction,  the County Sheriff will issue a deed to the foreclosing mortgage company.  Mortgage companies who obtain title to properties through this process usually  put them up for sale after they receive the deed.  These type of bank owned  properties are often referred to as “REO’s”.  They are usually listed for sale by a  real estate agent hired by the mortgage company.

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