| Foreclosure law varies from state to state | | | | |
| with regards to the exact process that must | | | | In states that use mortgages, foreclosure law |
| be followed in order for a bank or lender to | | | | makes foreclosure a judicial procedure. A |
| foreclose on your home. Knowing the | | | | lender must prove to the court that the |
| foreclosure law in your state can help you | | | | borrower has defaulted on the loan, and that |
| negotiate with your lender and perhaps avoid | | | | they, the lender, have made appropriate |
| foreclosure altogether. | | | | attempts to resolve the default with the |
| | | | homeowner. There is a definite sequence of |
| One of the largest differences in foreclosure | | | | events that must be followed as prescribed in |
| law is whether a state uses mortgages or | | | | the foreclosure law, and knowing that |
| deeds of trust for real estate. "Deed of | | | | sequence in your state can help you |
| trust" is a term that's not heard as often as | | | | understand your options in terms of resolving |
| mortgage, but in essence, they have the same | | | | the issue before it goes before a judge. |
| function - they protect the lender from | | | | |
| default on a loan that is secured by real | | | | In states that use a deed of trust rather |
| estate. The major difference is in the | | | | than a mortgage, the lender must go through |
| process the lender must use to obtain the | | | | certain steps of notification as required by |
| right to recover your property and sell it. | | | | foreclosure law in that state, but does not |
| | | | need judicial permission to proceed with a |
| When you sign a mortgage agreement with a | | | | sale or foreclosure on the property to which |
| lending institution, you retain the deed to | | | | they hold a deed in trust. |
| the property, and have full legal title to it | | | | |
| - but you allow the lender to place a 'lien' | | | | States whose foreclosure law requires |
| on it. If you do not make the payments on the | | | | judicial action include: Alabama, Arizona, |
| loan as agreed upon, the lender can foreclose | | | | Arkansas, Connecticut, Delaware, Florida, |
| on the property. | | | | Montana, Nebraska, New Jersey, New Mexico, |
| | | | New York, North Dakota, Ohio, Oklahoma, |
| In some states, a deed of trust takes the | | | | Illinois, Indiana, Iowa, Kansas, Kentucky, |
| place of a mortgage. With a deed of trust, | | | | Louisiana, Maryland, Michigan, Pennsylvania, |
| you give the deed to the land or property to | | | | South Carolina, South Dakota, Vermont, |
| the lender, but the lender can only use or | | | | Washington and Wisconsin. |
| sell the property if you default on the loan. | | | | |