foreclosure a while. If the court decides in the lender’s favor, the lender can then auction your home.
DEFICIENCY JUDGMENTS
Whether or not you live in a deed of trust state, the option of pursuing a judicial foreclosure is available to your lender. In some situations, the lender could decide it makes sense to take the longer route of going through the court. This is especially true if there is a deficiency (meaning, if your property does not sell for enough to cover your outstanding mortgage debt). For example, if you owe $350,000, but your home sells for only $330,000, the only way the lender can collect the $20,000 difference is to go through a judicial foreclosure process. That could include garnishment of your wages until your debt is paid off.
DIFFERENT RIGHTS OF REDEMPTI EMPTION
Usually, in a deed of trust state, you’ll have the right to redeem your property by paying off the full balance right up to the time of the auction. After the foreclosure sale, you will have no recourse. In contrast, mortgage states usually allow you to redeem the property within a few months after it is sold by paying off the full amount you owe on your mortgage.
POINTS TO REMEMB O REMEMBER:
• A growing number of states are adopting the deed of trust model to secure the borrower’s debt. In most of these states, the title to the property is held by a third-party trustee until you pay off your debt. In other states, the lender holds the title until your debt is paid. • Lenders in title theory states are likely to pursue non- judicial foreclosures because they are quicker and avoid the court process. 38
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