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real estate exam 3 chapter 9

Terms in this set (12)

Default
Refers to any failure to live up to the terms of the note or mortgage.
Technical default
Violations of the terms of the documents other than failing to make payments.
-The borrower will typically be required to rectify the situation but does not usually lead to foreclosure.
Substantive default
Falling at least three payments behind.
- This is the point at which lenders will usually start threatening foreclosure.
Short sale under non foreclosure responses to default
-borrower finds a buyer who is willing to purchase the property
-The proposed purchase price is less than the amount that the borrower owes on the loan.
-The lender agrees to accept the proceeds from the sale as payment in full for the loan and cancels the borrowers debt.
Deed in Lieu of Foreclosure
-Potential existence of other liens
-If borrower ends up in bankruptcy, this could be viewed as an attempt to jettison assets in advance of a bankruptcy filing.
Equity of Redemption
The term that is used to describe what the borrower must do to stop the foreclosure process and retain ownership of the property.
-Usually the process can be stopped up to the day of the foreclosure sale if the borrower pays the amount owed and all foreclosure costs.
-Some states allow a statutory right of redemption that allows the borrower to reclaim ownership after the foreclosure sale.
-Alabama: can reclaim property lost to foreclosure by paying the full unpaid loan plus foreclosure costs within on year of the sale.
-Iowa: For Farms, statutory right of redemption period of 5 years during which the lender may be forced to rent the land to the borrower.
-Georgia has no statutory right of redemption.
Deficiency judgements
-What does the lender do if they fail to recover everything that they were owed via the foreclosure process.
-Usually nothing
-Many states give the lender the right to use the courts to seek a deficiency judgement against the borrower. They rarely use this option.
-Georgia gives lenders 30 days to pursue a deficiency judgement.
The foreclosure process usually follows one of two procedures in the U.S.. What are they?
Judicial foreclosure and power of sale
Judicial foreclosure
Foreclosure sale is a court administered public auction.
Power of sale
Lender handles the foreclosure sale
-Must be very careful to follow property procedures.
States with the highest foreclosure rates
Nevada, Maryland, New Jersey, Florida, and South Carolina
Metro Areas with the highest foreclosure rates
Atlantic City (NJ), Trenton (NJ), Daytona Beach )FL) , Ocala (FL), and Jacksonville (FL).
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