 |
| CONSTRUCTION |
| REAL ESTATE |
| LOAN MODIFICATIONS |
| WILLS, TRUSTS & ESTATES |
| CORPORATE / BUSINESS |
| CONDEMNATION |
| ADMINISTRATIVE |
| ENVIRONMENTAL |
| INTELLECTUAL PROPERTY |
| LITIGATION |
| OFFICE LOCATIONS |
| CONTACT US |
 |
Read More - Foreclosures
A foreclosure is a process under law by which a mortgage holder (the lender) can terminate a mortgagor’s (the borrower’s) interest in property that is in default. The purpose of the foreclosure process is to allow the lender to regain the ability to sell the collateral property to repay part or all of the debt. Washington law allows lenders to foreclose on properties that are in default by using either a judicial or nonjudicial foreclosure process. While the judicial foreclosure process involves going through the courts to obtain an order to foreclose, the nonjudicial foreclosure process allows the lender or the trustee under a deed of trust to foreclose by selling the property without court involvement. Today, a lender may proceed under either of these processes.
Power of Sale Foreclosure
Often referred to as a "foreclosure by power of sale" or a "trustee’s foreclosure," nonjudicial foreclosure can only be used if a deed of trust (or other mortgage instrument) authorizes it. Today, it is widespread practice for a deed of trust to contain such an authorization by including a "power of sale" clause. This "power of sale" clause preauthorizes the sale of the property to pay off the balance of the loan in the event that the borrower defaults. Because a court is not involved in a power of sale foreclosure, there are very specific provisions, procedures, and formalities that the trustee or the lender must observe during the foreclosure process. Failure to adhere to these provisions and formalities could result in a court setting aside the foreclosure. Read More.
Generally, the power of sale foreclosure process takes about four months to complete. The following is a general timeline of the power of sale foreclosure process:
1. The borrower stops making their mortgage payment for three months.
2. By the fourth month, the lender will post on the property and mail a notice of default. This notice of default lists how much the borrower is in default and the amount that must be paid to cure the default.
3. If the borrower does not pay, then 30 days later the lender will post on the property and mail a notice of foreclosure and a notice of trustee’s sale. The notice of trustee’s sale will have a sale date that is at least 90 days away.
4. If the borrower fails to cure the default as set forth by the lender, the trustee will proceed to foreclose and sell the property at a foreclosure auction.
Judicial Foreclosure
Judicial foreclosures occur when a deed of trust or other mortgage instrument does not contain a "power of sale" clause. Without such a power of sale clause, the lender is compelled to take the defaulting borrower to court in order to foreclose on the property. In a judicial foreclosure, the lender brings an action in a court asking the court to issue an order calling for the sale of the property in default. If the court finds the debt valid and in default, the court will issue a judgment for the total amount owed, including the costs of the foreclosure process. The court then sets a date by which the borrower must pay or else lose the property. If the borrower fails to cure the default, the court issues a writ that authorizes the foreclosure sale and the property subject to foreclosure is then sold at a court-supervised auction.
