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Foreclosures – “101” The Process – Start to Finish
Disclaimer• These slides were created to help the Maine real estate practitioner gain a general and cursory understanding of Maine foreclosures. For specific questions or issues, one should always seek the advice of counsel.
Foreclosures – “101” Maine Overview• Residential foreclosures in Maine are completed through the courts. The court must provide a Judgment of Foreclosure in order for a mortgagee to foreclose a residential mortgage. The court determines if the conditions of the note or mortgage were breached and also proscribes the priority of payments in the foreclosure sale.• DO NOT Believe all you read Online . . .
Foreclosures – “101”• It’s a LEGAL process – defined by Statute – Title 14, Chapter 713, Subchapter 6 … §§6321 et. seq.• Court process required for Nearly All – (Deed in Lieu)• Longer than Most Expect
Foreclosures – “101”It All Begins at the Closing Table ?? Consensual Lien “Legal Promise to “If you Pay , Pay” You can Stay … And if you don’t … We can Foreclose”
Foreclosures – “101”• Promissory Note – If you’re late, you’re in Default.• Default Notice Required• 30 Day Right to Cure• If Not Cured, Foreclosure is the Option of the Legal Mortgage Holder “Law is a Lawyer-Driven Process”
Foreclosures – “101” Common Issues in Maine (with examples)• Foreclosure deed missing from record, although foreclosing lender and buyer are the parties in a P & S (Wells Fargo is selling to our buyer, title review shows Wells was the high bidder, no foreclosure deed on record, proposed deed is from Wells to our buyer –need foreclosure deed from Wells to Wells recorded)• Judgment of foreclosure fails to name one of the mortgagors as a defendant (Bob and Sue Smith gave a mortgage to Wells, Bob Smith only named as defendant in Judgment –need to find out what happened to Sue Smith, may need to redo foreclosure)• Mortgage is assigned after the foreclosure sale (Wells Fargo obtained judgment, was the high bidder at auction, then assigned the mortgage to U.S. Bank, U.S. Bank selling to our buyer –require assignment from U.S. Bank back to Wells, deed from Wells to our buyer)
Foreclosures – “101” Common Issues in Maine (with examples)• Judgment obtained, but lender agrees to a short sale (Wells Fargo receives Judgment of Foreclosure & during or after the borrower’s 90 day redemption period, the borrower enters a P&S, Wells agree to the payoff amount –we must obtain and record a Waiver of Foreclosure and foreclosure action must be dismissed)• There may be non-foreclosure related title issues associated with the property. Because the lender is often the owner of the property, it is commonly difficult to resolve prior owner title issues.• Most common source of problems with Maine foreclosure review is lack of information. Often the Clerk’s Certificate and Judgment are the only recorded documents. Title insurers want the report of sale returned to the court, however, the foreclosure statute does not require this prior to a conveyance to a third party.
Foreclosures – “101” What We Know….• Limited ability to control transaction timeline• Requires us to be flexible in dealing with:• P&S Timeline• Unexpected Title Issues• Buyer Expectations• Requires teamwork with all parties
Foreclosures – “101” What Can We Do? Help Client(s) understand the Process & Remain Flexible. Inform Buyer’s Lender of foreclosure purchase & Request flexibility with loan programs/closing dates. Manage client expectations & work as a team with your buyer’s lender & title company.
Foreclosures – “101” OUR COMMON GOAL:Limiting stress and anxiety related to a foreclosure transaction.