Methodological Foreclosure Approach

Posted on January 28th, 2009 by saman

There are different approaches involved in a foreclosure, when it is brought into scene. The four basic Foreclosures involve Deed In Lieu Of Foreclosure; Judicial Foreclosure; Statutory or Non-Judicial Foreclosure; Strict Foreclosure.

Whatever the kind of situation the person is pushed into, the awareness of the different types involved in foreclosure helps them know how to handle the situation legally. Though this may sound peculiar, it is quiet useful when it comes to terms and implementing it to real practice gains more value.

Deed In Lieu Of Foreclosure:

This type of foreclosure literally means that the person, who has borrowed some amount, simply replaces the amount with the agreed provision as per the agreement that he might have signed while borrowing. This type of foreclosure is beneficial both to the lender and the person who has borrowed. By doing this, the borrower can avoid the public advertising of his property to be on sale. Also, for the lender who is going to be highly benefited can sell the property for his own resale value, getting more profits than the money he has lent.

Judicial Foreclosure

This is the very common foreclosure process underwent in the name of foreclosure. Whenever the person who borrowed the amount is not able to or have not return it in the agreed due, then a notice will be sent to them stating that they will be treated legally and the terms mentioned in the agreement will be followed. Though this process can be compared to “Deed In Lieu Of Foreclosure”, the difference comes in the way of taking ownership of the property. In this particular type, the property is lent for an auction and then the amount is taken either by selling the foreclosure for sale who bids for the target amount or by owning the property if no one comes ahead to buy the property for the resale amount.

Statutory Foreclosure

It is a foreclosure done by sending the notice to the borrower, if the due is not paid in time. Here, the lender need not go with the terms and condition of court orders. The activity taken in this foreclosure involves the mutual agreement made with the two parties while the money is borrowed. The mutual agreement may an attested document. This is a relatively fast and cost-cutting procedure as it does not involve a judicial work.

Strict Foreclosure

As the title speaks, this foreclosure is a kind of tough dealing with the lien holder. In case, the borrower fails to make up with the amount in due, then the lender has the rights to take the provision that is mortgaged during the agreement. The difference in this foreclosure is that the lender need not get any permission judicially or even from the borrower, just intimation is enough and the property is owned by the lender. This type is quiet a kind of cheating made to the person who borrows money and he is into trouble as he need not be given any settlement for the mortgaged property. So, this foreclosure is rarely followed in the market.