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Mortgage Foreclosure Varies By State
By Myles Johnstone

There are very few feelings that are worse for a homeowner than to realize their home is the target of a mortgage foreclosure and they are probably going to lose their house. Laws vary from state to state and there are no federal laws governing mortgage foreclosure unless the property is secured by the veterans administration, HUD or another governmental home loan guarantee office.

Typically, before a court will grant a mortgage foreclosure the lending institution must prove the mortgage is in arrears by at least two months, although some mortgage agreements stipulate any remaining balance will come due and payable if a single payment is late by a minimum number of days.

While that time period may be established by agreement, most states require a hearing at which a judge determines if the mortgage should be due and payable in full, as well as the amount that is owed. The court will then grant the borrower a specific time period in which to pay the amount in full before granting mortgage foreclosure. If the amount is not paid, mortgage foreclosure is generally granted and a date is order on which the house will be sold at sheriff's auction, depending on the state's specific law.

Freedom Sought From Unethical Mortgages

In rare cases, a homeowner may believe they have been the target of an unscrupulous lender who had accomplices inflate the appraised value of a property in order to increase the selling price. When that occurs some buyers may go to court seeking an order of voluntary mortgage foreclosure in order to have the court offer relief from overpaying for the property.

Despite the legality of the buying contract, courts have been know to recognize that fraud has occurred on the part of the seller and will order a reduction in the mortgage amount claimed to be owed. However, usually for this to happen, action must have been initiated by the buyer before any mortgage foreclosure action has been taken by the seller.

Properties sold as a result of a mortgage foreclosure are typically sold for a minimum of two-thirds of their appraised value in most case, they are purchased by agents of the original lender who can either resell the property or maintain its ownership as an investment. Depending on the condition of the property, the company can then resell it for full value, or higher, and make a profit on the mortgage foreclosure.

About the Author
Myles Johnstone writes exclusively for finance related sites about such subjects as commercial mortgages and credit repair

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