Various Types of Liens and How Liens Impact Foreclosures

Question 1

Lien types include:

Answer 1

• Voluntary and Involuntary
• General and Specific
• Superior and Junior

Question 2

What is lien priority?

Answer 2

Is the rank ordering of claims established by lien classification and date of recording. Priority determines who gets paid first if lien defaults

Question 3

Do superior liens rank over junior liens? How?

Answer 3

Yes

They are not ranked by recording date. They include liens on real estate tax, special assessments, and inheritance taxes

Question 4

Describe junior liens

Answer 4

They are ranked by recording date. Include judgment, mortgage, vendors, utility, mechanic’s, and other tax liens. Mechanic’s lien priority “dates back” to when work or sale transpired

Question 5

What does a foreclosure involve?

Answer 5

Enforcement of liens through liquidation or transfer of encumbered property

Question 6

What is a mortgage lien foreclosure?

Answer 6

Is the liquidation or transfer of collateral property through judicial, non-judicial, or strict foreclosure

Question 7

What is a judicial foreclosure?

Answer 7

Lawsuit and court-ordered public sale, deficiency judgments, redemption rights

Question 8

Explain acceleration and filing

Answer 8

If a borrower has failed to meet loan obligations in spite of proper notice and applicable grace periods, the lender can accelerate the loan, or declare that the loan balance and all other sums due on the loan are payable immediately

Question 9

What is a non-judicial foreclosure?

Answer 9

“Power of sale” granted to lender, no suit, no deficiency judgment, no redemption period after sale

Question 10

What is a strict foreclosure?

Answer 10

Court orders legal transfer of title directly to lender without public sale

Question 11

What is a deed in lieu of foreclosure?

Answer 11

The defaulted borrower deeds property to lender to avoid foreclosure