A mortgage is the agreement made between a homeowner and a lender regarding a loan and the property secured by it. Therefore, it is the instrument under which a default of the loan is defined, notice requirements are set out and foreclosure by advertisement is authorized. There are certain requirements that must be met for a lender to foreclose by advertisement and thereby avoid a judicial proceeding. There must be a power of sale clause in the mortgage, and the mortgage in turn must be properly recorded at the Register of Deed’s office of the county in which the property is located. If the mortgage was ever assigned from one lender to another, that document must also be properly recorded.
Notice of Default
The lender will often try to contact the homeowner after a missed payment, either as a collection method or because the mortgage document requires notice of default. Avoiding these attempts at contact is often a mistake for the homeowner because this is often the best, last chance to come to a work-out arrangement with the lender before the next stage of the process: the referral of the mortgage to an attorney for foreclosure after one to four missed payments.Notice by Advertisement
The attorney will set a date and time for a foreclosure sale, which usually takes place within four to six weeks. According to statute, the lender must post a notice over four consecutive weeks in a newspaper that covers the county in which the property sits. Within 15 days of the first publication, the lender must also post a copy of the advertisement on the premises. Note: There is no statutory requirement to otherwise notify the homeowner, but there may be a requirement within the mortgage document.Foreclosure Sale/Sheriff's Deed
The foreclosure sale is a pinnacle event in the process; until the sale, the homeowner can still try to work out something with the lender. Once the property is purchased at a foreclosure sale, however, the liability and time limitations are set for the homeowner to recover the property.Within 20 days after the property is purchased at a foreclosure sale, the purchaser must record the “deed of sale” or "sheriff's deed" with an attached affidavit setting out the information regarding redemption, including the date the redemption period expires and the amount required for the homeowner to redeem.
Redemption Period
Redemption refers to the homeowner’s right to recover the property from the purchaser by paying the amount the purchaser paid for the property, its taxes and insurance (together with various fees and interest) within a set, statutory time period.The redemption period is determined by statute and can range from one month to one year, but is usually six months. During the redemption period, the purchaser holds equitable title to the property, but the original homeowner continues to have legal title and possession.
