Foreclosures go through the courts when there are title problems. A lawsuit is filed to obtain a court order of foreclosure, and the foreclosure sale process is directed by the court.
Out-of-court proceedings are most common. They occur when a clause exists in a mortgage that empowers the lender to sell the property if the borrower defaults. A preliminary hearing is conducted before a power of sale foreclosure can take place. Not fewer than 10 days before the notice of hearing, the lender mails or personally delivers the amount due plus expenses to the borrower. After the notices have been issued, the county clerk conducts the hearing to determine whether a foreclosure sale will take place.
The typical foreclosure timeline is approximately three to four months.
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Notice of Sale / Auction
If the deed of trust or mortgage contains a power of sale clause and indicates the time, place, and terms of sale, then the specified procedure must be followed.
A notice of sale must include the names of all parties involved, a legal description of the property, and the date, time and location of the sale. The lender mails the notice of sale to the borrower and relevant parties at least 20 days prior to the sale date. The lender also publishes the notice in a local newspaper once a week for two weeks, and the last publication cannot be more than 10 days before the sale date. Further, the lender posts the notice of sale at the county courthouse at least 20 days before the sale.
The sale is conducted between 10:00 a.m. and 4:00 p.m. at the courthouse, and the property is sold to the highest bidder. If the sale is postponed, a notice stating the revised date and time of the sale is posted at the courthouse.
The borrower has a 10-day right of redemption after the sale by paying what is owed to the lender plus any sale costs. Further, any party may enter an upset bid during that same period by submitting a deposit of at least 5 percent of the bid to the county clerk.