Using power of sale in a foreclosure process

Sometimes homeowners are faced with financial hardships that could lead to a foreclosure of their house. While a foreclosure can be a bit daunting, there are advantages as well as disadvantages involved in the process. One of those advantages is power of sale. A foreclosure by power of sale is presently legal in 29 states, including Minnesota.

One great advantage in a foreclosure by power of sale is that the lender, not the court, is involved in the sale of the property. However, although the courts have less oversight in the process when compared with a judicial sale, the courts will have to get involved regarding unresolved issues surrounding the property's title or deed and any lessees that may still be attached to the property. In order for the power of sale to be used in a foreclosure, the mortgage cannot be set up as an absolute deed, and the mortgage forms that are used in the process must provide a general allowance for it.

Furthermore, depending on the jurisdiction of the property being sold, a deed of trust must be obtained before a foreclosure by power of sale can occur. With a deed of trust, the mortgage holder conveys the property to the trustee who is in charge of selling the mortgaged property under the supervision of the mortgage holder. In a foreclosure by power of sale, the mortgage holder is not allowed to bid on the mortgaged property if that person is in close association with the trustee.

Anyone who feels overwhelmed by missed mortgage payments and a possible foreclosure of their home may benefit by retaining the services for a bankruptcy attorney who may offer various debt relief options to fit a particular individual's circumstances. Several of those options include a debt settlement or a Chapter 7 or Chapter 13 bankruptcy filing, which may stop a foreclosure and help the filer reorganize or discharge some of his or her debts.

Source: FindLaw, "Foreclosure by Power of Sale", September 07, 2014

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