Foreclosures
If you fail to pay promptly on your mortgage or home equity loan, your lender is entitled to foreclose, or force a sale on the loaned property, to recover your unpaid balance. Lenders may be able to resort to the two different types of foreclosure: mortgage foreclosure or deed of trust foreclosure.
Mortgage Foreclosure
Mortgage foreclosure, also known as judicial foreclosure, usually occurs when the foreclosure is triggered by a true mortgage or a judgment issued against you and in favor of the creditor in a lawsuit. The foreclosure process, which varies widely among states, usually requires that it is brought to court. Because the lender has to initiate a judicial action to foreclose your property, this process takes a longer duration. If the court grants the foreclosure of the property, it will award judgment of foreclosure and sale to the lender.
Deed of Trust Foreclosure
If, however, you default payments on a home loan that offered a deed of trust as its security, then the lender may foreclose the property without the need of going to the court. Under a deed of trust, title to the property remains with the lender and is transferred only upon full payment of the loan. Thus, default on a trust deed triggers a binding foreclosure action that takes much less time to complete than a mortgage foreclosure. For this reason, the long and sometimes arduous court action is no longer needed when you default on the loan, and the lender will be in full possession of rights on the property, including sale. The process for deed of trust foreclosure is usually similar from state to state.
Defenses to Foreclosure
There are possible defenses to stop, or at least, delay the process of foreclosure. These may include the lender's commission of any of the violations under the federal Truth in Lending statute, the rates of interest or terms of the loan contravene federal or state laws and automatic stay in bankruptcy. If you think that you have any defense against the foreclosure of your home, immediately engaging the services of a legal counsel would be highly beneficial and help you stay in it longer.