RE Law Chp 10& 17

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  1. Default
    Borrower fails to meet a duty imposed upon him by mortgage, deed of trust, or promissory note
  2. Workouts
    Lenders non-foreclosure response to a default

    • Process:
    • 1. garther loan docs
    • 2. review loan docs
    • 3. determine borrowers legal remedies
  3. Loan Modification
    Reduce or suspend payment

    extend repayment

    reduce or eliminate accured interest
  4. Voluntary Conveyance
    borrow transfers title to lender to satisfy loan default

    passes existing lines on (liens junior to the mortgage survive)
  5. Short Sale
    Borrowre sells to 3rd party, with lenders consent, for a price LESS THAN amount owed on loan
  6. Foreclosure
    Terminates borrowers claim of ownership

    2. Eliniates junior-priority liens (Lender sells title free and clear of liens)

    • 3. Lender must:
    • Sue on promissory note or
    • foreclose on mortgage
  7. Judicial Foreclosure
    Mortgage required to follow procedural requirements (otherwise foreclosure doesn't occur)

    • Process:
    • 1. File and serve compliant
    • 2. Trail of foreclosure sale
    • 3. Order foreclosure sale issued
  8. Redemption Rights w/ Foreclosure
    Equity Redemption: prior to sale, borrower can redeem the property. Pay default+interest+foreclsoure cost+all other costs

    Statutory Redemption: After foreclosure, borrower can redeem property within certain time frame after foreclosure sale
  9. How courts can invalidate a foreclosure sale
    1. Shock the conscience standard: due to fraud, sale price is unjust

    2. Gross Inadequacy Standard: Price is shown as result of mistake, surprise, or some irregularity
  10. Foreclosure by Power of Sale
    1. Lender foreclose without court

    • Process:
    • Record notice of default
    • set sale date
    • trustee sale
  11. Redemption Rights for Trustee Sale
    Equity redemption rights: available up to several days before sale

    statutory right of redemption: no right of redemption post sale of property
  12. priority of distributing forceclosure sale proceeds
    • 1. Property tax lien
    • 2. costs of foreclsore
    • 3. PMSI
    • 4. First priority debt
    • 5. Second and third priority debt
    • 6. Surplus distribted to owner foreclosed on
  13. Deficiency Judgement
    proceeds from sale insufficient to pay debt, lender can sue the owner for balance

    Only party foreclosing can receive deficient judgement
  14. When are deficiency judgments not allowed
    • Purchase Money Mortgages
    • 1. Borrowed funds used to finance the purchase of the property

    2.  FHA, vA, and Refiannces CAN have deficiency judgements
  15. Home Affordiability Refinance Program
    1. If current on payent, but unable to refinance bc of declining home value
  16. Principal Reduction alternative
    • 1. HARP-eligible borrower
    • 2. owe more than home is worth
    • 3. obtained mortgge before 2009
  17. Home Affordable Modification
    • 1. Employed homeowners
    • 2. have defaulted
    • 3. reduce mortgage payments to 31% of gross income
  18. Home affordable Unemployment program
    1. HAMP for unemployed. Reduced payment to 31% of unemployment income
  19. Home Affordable Foreclosure Alternatives
    • 1. Unable to keep up with HAMP
    • 2. allows short sales and deeds-in-lieu for homeowners

    3 lose home, but Waives Deficiency Judgment
Card Set
RE Law Chp 10& 17
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