Being a property owner exposes you to a whole host of responsibilities, including making your payments in a prompt and full manner. It's never a god idea to default on your mortgage payment. Such an unfortunate occurrence can open the door to the foreclosure process. This process takes many forms, including the sale of your property as supervised by a court of law. This particular form of the process is known as foreclosure by judicial sale.
What Does the Process of Foreclosure by Judicial Sale Involve?
This process begins when you default on too many of your mortgage payments. Foreclosing proceedings under this particular process will involve first the seizure, then the sale, of the property in question under the strict supervision of a court. After the sale has been concluded, the proceeds will go first to the mortgage holder, and then to anyone else who holds a lien on the property. If any proceeds from the sale are left over, they will go to the original property holder. This form of the foreclosing process is available in every state, and is the required form in many of them.
It should be noted that this form requires that all parties in the process be noted so that they can attend the judicial hearing. This is to make sure that there is no dispute over who becomes the rightful holder of the property after the hearing has been concluded. In nearly every case, the eventual "winner" will be the mortgage holder - usually a bank or some other form of lender.
Who are the Necessary Parties in the Foreclosing Process?
There will be a number of people, known as necessary parties, whose presence at the hearing will be required in order for it to proceed as a fully legitimate legal process. These necessary parties will be anyone who acquired an easement, lien, or lease on the property after the original mortgage was taken out on it. These are people whose claims must be satisfied before the foreclosed property is handed over to the mortgage holder.
Who are the Proper Parties in the Foreclosing Process?
There will also be a number of people involved in the case who are known as proper parties. These will be people who are judged to be useful, although not strictly necessary, in order to move the case along as efficiently and fairly as possible. For example, a proper party might be a person who had some sort of interest in the property at a time before the mortgage was executed. These people will not receive any payment from the foreclosing process. They are included in the process so that their relationship to the property - specifically, their lack of any claim to it - is fully clarified.
What is the Proper Procedure in a Judicial Foreclosure?
The judicial foreclosing process will normally begin when a judge or sheriff declares the property available for sale. At this point, the holder of the mortgage is allowed to bid on the property. If there are any lien holders on the property who are not named as a party to the process, the mortgage holder can choose to pay them off by using some of the proceeds from the sale. This will give them clear title to the property.
If there are any other parties with minor claims who were not named in the process, the mortgage holder can pay this junior lien holder an amount of money to buy out their interest in the property. They can also choose the option of re-foreclosing on the original mortgage in order to eliminate the claims of junior lien holder. However, to achieve this goal, they will have to go through a second, completely separate court ordered foreclosing procedure.
If the Sale Doesn't Pay off the Mortgage, What Then?
If the proceeds from the foreclosing sale do not manage to pay off the debt owed to the mortgage holder, the person who took out the mortgage may have a deficiency judgment brought against them. This means that, if the sale fell short by $2,000, the holder of the mortgage may sue you to recover the extra amount.
However, in many areas, the concept of deficiency is mitigated by "fair value" legislation. This means that the amount of the shortfall will be calculated by comparing the amount of the mortgage against the actual "fair market" value of the property. This could result in a significant lessening of the amount that you owe the holder of the mortgage.