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Foreclosure is the legal process by which a Mortgagee, or other lien holder, usually a Lender, obtains a court ordered termination of a Mortgagor’s equitable right of redemption. Lender’s use the Trust Deed, the security interest recorded against a property in exchange for making a loan, to repossess the pledged asset from the Borrower in the event the Borrower defaults (fails to repay) the loan. Other lien holders can also foreclose for other debts, such as overdue taxes, unpaid contractors’ bills, or overdue homeowners’ association dues or assessments.
NOTE: When the process is complete, the lender can sell the property (either on the open or at public auction) and keep the proceeds to pay off its mortgage and any legal costs. If the Promissory Note was made with a recourse clause (personal guarantee by Borrower), if the sale of the property does not bring enough to pay the existing balance of principal and fees, the Mortgagee can file a claim for a deficiency judgment against the Borrower for the balance owed.
A Notice of Default (NOD) is the first of three phases in the Foreclosure process. The NOD is a notification given to a borrower stating that he or she has not made their payments by the predetermined deadline agreed to in the Promissory Note. The NOD dictates that if the money owed (plus any additional legal fees) is not paid in a given time frame, the Lender may choose to Foreclose the Borrower’s property. Any other people whom may be affected the pending foreclosure may also receive a copy of the notification. The NOD is filed and recorded into public record.
A Notice of Trustee’s Sale (NTS) is the second of three phases in the Foreclosure process. The NTS is a notice that sets forth the day, date and time of the Trustee’s Sale, describing the property to be sold and gives an estimate of the unpaid debt as of the first publication debt. This notice is prepared by the Trustee and does not require the acknowledgment of a Notary Public and must be recorded with the county recorder in the county in which the property is located at least 14 days prior to the scheduled sale date. The NTS is filed and recorded into public record.
A Trustee’s Deed Upon Sale is the third of three phases in the Foreclosure process. It is a written document (form of Deed) which is prepared and signed by the Trustee when the secured property is sold at the Trustee’s Sale (Auction). This document transfers ownership to the successful bidder at the sale, and must be recorded with the county recorder in the county in which the property is located.