In Rem Foreclosure
In rem foreclosure is when the mortgage holder in an original contract with the lender fails to cure the default and the lien is recorded as delinquent on the public record. The borrower is granted the right by the contract, to cure the default by submitting to the lien holder a reasonable and legitimate opportunity to cure the default. The borrower must cure the default in terms of paying all payments and/or other obligations and appear in court to accomplish so. In addition, if the borrower does not cure the default the borrower may be declared in default and the entire lien will be liquidated, including any redemption penalty paid. After the date specified in clause (b), the finance shall sell the real property in accordance with the provisions of this chapter and pay the proceeds to the person or persons who were the parties to the contract and on such payment the former owner is released from the lien. If the borrower fails to pay the debt in a reasonable time, the default is renewed and the borrower is liable for charges of deficiency after the third day following the sale. If the borrower does not comply with these provisions of this chapter and the sale does not complete in accordance with the provisions of this chapter, the buyer has the right to foreclose upon the property as security for the debt. If the proceeds of such debt in excess of twenty-five percent of the total value of the real property do not recover the deficiencies in full, then the buyer is liable for all costs. If the buyer fails to comply with these provisions of this chapter, then the seller has the option of opting for the provision of another contract, known as an execution order.
In rem foreclosure, the process is much like that of judicial foreclosure. Once the default has been cured, the lien is lifted and the mortgage note is canceled. The title to the property passes to the lender under the provisions of any deed of trust. From here, it is up to the lender to find a buyer for the property. In most states, the first lien holder will be allowed to submit new buyers to the bidding. The second or third lien holder will be required to counter the offers provided by the first and submit their bids. Upon approval of the initial bids, the property can then be sold to the highest bidder. However, if the second or third bidder fails to pay the loan balance in a timely manner, the first and second holders will be allowed to auction again to pursue the delinquent lien holder.
avoiding In Rem Foreclosure
To avoid this process, many real estate buyers opt for an in rem purchase. An in rem property is one that does not have any pending foreclosure issues; therefore, the lien holder cannot pursue the debtor for payment. Because of its popularity, an in rem sale has become a popular option for buyers and investors. Real estate companies commonly offer this type of real estate transaction. This option is particularly attractive to borrowers who do not qualify for the loan modification because the additional time devoted to in rem transactions allows borrowers to catch up on past due payments without incurring additional financial hardship. Another type of real estate sale involves selling the property to a property buyer. In this case, the property will be offered directly to a willing buyer. A mortgage banker will act as the intermediary between the seller and buyer. Although this arrangement has a lower percentage rate of success, it is common for lenders to have a complete loss in some cases. Therefore, it is recommended that a mortgage broker service is utilized in this type of transaction. If you need the assistance of a foreclosure attorney call us today.