A foreclosed home lawsuit is a type of legal proceeding wherein one party (usually the mortgage lender) seeks to assert their rights to collect home payments from the borrower. These types of lawsuits usually result when the homeowner has been unable or unwilling to meet the mortgage payments. A foreclosure proceeding is typically filed when the person misses at least four mortgage payments.
In a foreclosed home lawsuit, the lending institution may often be allowed to take possession of the home and sell it in order to recover the missed payments. This may happen through a power of sale or a judicial sale.
A power of sale is where the lending institution (such as a bank or mortgagor) sells the home and then collects the proceeds. A judicial sale is where the court intervenes to sell the home, with the proceeds being distributed to the mortgagor(s). Court intervention may be necessary if the issues are being heavily contested.
Alternatives to foreclosure may be available to the borrower in some cases (such as modifying a mortgage agreement).
In some foreclosure cases, a deficiency judgment may be necessary. This is where the court compels the mortgage borrower to make up any difference between the proceeds from the sale of the home and the amount owed on the mortgage.
For instance, suppose that the person owed $9,000 to the mortgage company. If a foreclosure sale only yielded $8,000, a deficiency judgment may require the person to make up for the $1,000 difference. Deficiency judgments are not available in all states or for all types of claims.
Foreclosed home lawsuits typically require the assistance of a qualified real estate attorney. You may wish to hire an experienced lawyer in your area if you need help filing or defending against a lawsuit. Your attorney can provide you with the expert advice and representation that is needed in a real estate lawsuit.