Ch 13 loan defaults and foreclosures
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Ch 13 loan defaults and foreclosures

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    Ch 13 loan defaults and foreclosures Ch 13 loan defaults and foreclosures Presentation Transcript

    • Loan Defaults and ForeclosuresChapter 131
    • Defaults• Breach of one or more of the conditions or terms of a loan agreement• Acceleration clause activated• Lenders seek to avoid foreclosure• Acceleration and foreclosure as last resort2
    • Delinquencies• Principal and interest • Grace period • Late period charge• Property taxes• Other liens• Hazard insurance• Poor property management3
    • Adjustments• Workouts• The Soldiers and Sailors Civil Relief Act of 1940• The Housing Act of 1964• Avoiding a foreclosure• Moratoriums (forbearance) and recasting• Voluntary conveyance of deed4
    • Foreclosures• Process to recover lender’s collateral— borrower’s rights of redemption are eliminated and all interests in the subject are removed – Equitable redemption period – Strict forfeiture – Statutory redemption period5
    • Power-of-Sale Foreclosures• Deeds of trust – Beneficiary notices payment delinquencies; borrowers are unable to remedy – Beneficiary notifies trustee to foreclose – Trustee files Notice of Default – Reinstatement period – Notice of trustee’s sale and publication of date, time, and place of sale – Sale is held and highest cash bidder wins – Trustee’s deed is given to successful bidder 6
    • Judicial Foreclosure and Sale• Conventional mortgages – Lender notifies delinquent mortgagor – If no solution, complaint is filed by mortgagee in county court – Title search made; lis pendens filed – Complaint brought before presiding judge – Judgment decree – Public sale• Conventional guaranteed mortgages• Equitable redemption• Statutory redemption7
    • Loans with Special Foreclosure Requirements• FHA-insured loans• DVA-guaranteed loans• Junior loans8