What is Foreclosure by Power of Sale?

foreclosureOnce a mortgage consists of a clause, which grants a power of sale, it is a legal foreclosure. Many states allow this kind of transaction when the homeowner defaults on the home loan and stops making payments. The lender would send mortgage notices prior to the foreclosure in demand that the homeowner makes the payments current. When the waiting period has been determined and the homeowner has made no payment, the mortgage lender plans a public auction. In other cases, the lender will have the foreclosure done through the sheriff’s office or court system. This is known as a non-judicial foreclosure sale, which oftentimes is done rather quickly, even though, it may be subject to a review to make sure that the proceedings are legal. If the proceedings are not legal, one of the NYC Real Estate Attorneys can help.

The Borrower

On the other hand a foreclosure by power of sale is when the borrower cannot make the monthly loan payments and is in financial trouble and so, the borrower may contact the bank and pre-authorize the sale. The lender would only use the non-judicial option to pay off the mortgage balance, if there is a loan default.  This means that there wouldn’t be any court oversight on the foreclosure sale. If it were a judicial sale, then it would have to go through the court system where Real Estate Lawyers NYC are available for legal representation.

The Process

Each state establishes its own power of sale foreclosure procedures. This means that each state would have its specific requirements to carry out the process. However, generally, once the borrower has a defaulted loan, the lender would provide a limited foreclosure notice in various forms such as publishing it in the local newspaper, mailing a letter of default, or posting a notice. A trustee would be assigned to sell the home at a foreclosure sale in a non-judicial capacity. It is required that the lender follow the exact procedures, waiting periods, and notification timeline.

Consult a Lawyer

If the mortgage lender does not comply with the statutes put in place by the state, then the borrower can solicit the help of a Real Estate Lawyers in NYC to assist with determining and establishing his rights. Contact Romano & Kuan to discuss the specifics of your situation.