Class 19: Foreclosure Methods - Mar. 25 Flashcards
What is strict foreclosure? (Emanuel)
Under strict foreclosure, if the mortgagor does not redeem by a date set by the court, the mortgagee retains the property.
What is deficiency? (Emanuel)
If the value of the property is less than the debt, foreclosure results in a deficiency. The deficiency is the difference between the debt and the sales proceeds.
What is surplus? (Emanuel)
If the value of the property is more than the debt, the mortgagor has equity. There is a surplus if the sales proceeds exceed the debt.
What is a judicial foreclosure? (Barros) (Eason)
In a judicial foreclosure jurisdiction, foreclosure occurs through a judicial proceeding and the foreclosure sale is subject to judicial supervision. (511) The lender files a lawsuit against the borrower and any junior interest holders seeking a judgment that foreclosure is justified. (4/4)
What is a power of sale foreclosure? (Barros)
In a power of sale jurisdiction, foreclosure is a private process. The lender or other private party is given the power to sell the property on default by the borrower. There is no direct judicial supervision of the foreclosure sale. (511)
What happened in Karoutas v. HomeFed Bank (1991)? (Q)
A beneficiary under a deed of trust that has knowledge of a property’s defects has a duty to disclose material defects to prospective bidders at a trustee’s sale.
What is a necessary party in a judicial foreclosure? (Bender)
A necessary party is one that must be joined in order to give the purchaser at the foreclosure sale essentially the same title as the borrower had on recording of the mortgage. (473)
While failure to join a necessary party will give the mortgagee or other purchaser title subject to the rights of the nonjoined junior party, it will not invalidate the foreclosure.
What is a proper party in a judicial foreclosure? (Bender)
A proper party is one whose interest need not be cut off to give the mortgagee or purchaser at the foreclosure sale the borrower’s state of title at mortgage recording. (474)
In a foreclosure, what is the key issue from the mortgagee point of view? (Bender)
The key issue from the mortgagee’s point of view is whether the mortgagee intends that the foreclosure affect or impair the party’s rights. If so intended, the party must be joined for the purpose. Failure to do so leaves the party unaffected by the foreclosure. (474)
