The Statute of Limitations on Mortgage Debt is the time limit allowed for the creditor to bring legal action against the debtor for the total debt amount. In most states the Statute of Limitations begins to apply from the point of default (the date when the lender files a lawsuit in an effort to recover the debt). Some states have a three-year limitation, others have a five-year limitation. In order to determine the applicable Statute of Limitations in your state, you will need the help of an attorney experienced in foreclosure and other debt issues. When a mortgage is sold, the buyer typically signs a written contract with the lender providing that payment of the debt (mortgage plus interest and fees) would be made only after the end of the Statute of Limitations. This agreement between the lender and borrower gives the lender some wiggle room to try and collect the debt even if the Statute of Limitation has already expired. If the borrower fails to make payment on the debt, the lender has the right to begin legal proceedings to recover the remaining debt from the estate of the deceased person who insured the loan. At this point, if the lender does not prevail in the court case, the property sold to satisfy the debt is foreclosed.

statute of limitations on mortgage debt and avoiding foreclosure

In order to avoid having your mortgage foreclosed, it is imperative that you do everything possible to cure the debt in good time to avoid the courthouse doors being slammed in your face. There are two basic options available to a homeowner who is facing foreclosure. They can file a lawsuit to recover the outstanding debt. Although filing a lawsuit may sound like the best option, it also requires the expenditure of legal counsel and fees. The other option is to do everything possible within the Statute of Limitations to eliminate the debt. The Statute of Limitations is different for every state. Each state has its own unique calendar date. Typically the Statute of Limitations begins to apply from the day the debt accrued, but varies depending on the state. It is important to be aware that the Statute of Limitations does not begin to apply until the lawsuit has been filed in the appropriate court. If the lawsuit is successfully filed in a court of law, the lender is required by law to pay the outstanding debt and attorney fees. If the lender does not respond in a timely fashion, foreclosure may follow.

A mortgage is a contract between a borrower and a lender. In order to ensure that the mortgage is paid in full and the borrower is protected from foreclosure, the lender will often engage in what is called an expensive litigation process. This litigation is designed to protect the lender’s interest in the underlying mortgage by ensuring the borrowers are given a chance to cure any financial hardship caused by paying the mortgage. In order to give the borrower a chance to cure the financial hardship, the lender must be able to provide documentation that the borrower has made substantial and consistent payments. Once the borrower proves that they have done what is required of them, then the lender must give the borrower the opportunity to submit a timely and complete repayment plan to satisfy the original debt. In California, the Statute of Limitations for mortgages runs from the date of signing the initial mortgage agreement or the date the buyer closes the deal if it was a closed property sale. Each state has a different statute of limitations. Although it is rare for a lender to file suit after the Statute of Limitations has expired, if this does occur, the borrower has the right to pursue legal action against the lender to recover the outstanding debt. For more information on foreclosure and other options available to avoid foreclosure contact an experienced foreclosure attorney.