Trust Deeds and Mortgages - Posted by John Behle
Posted by John Behle on February 22, 2000 at 14:05:06:
There are different laws state to state. Since we don’t know your state - that is why there is controversy. Everyone is right - acording to their state laws.
Generally if the document is a mortgage, there is a right of redemption period of usually around 6 months where the owner (the estate or family) could redeem the property. That means they would have to pay off the loan or refinance. After foreclosure they can’t “re-instate” the loan, but can get the property back by paying the loan and interest in full.
So, if it is a mortgage then you do want to work with the estate. You can buy the property from the bank, but it would be subject to the “right of redemption”. Your best bet would be to negotiate with the family and buy out their right of redemption. Redemption periods vary state to state and my understanding is there are some mortgage states that still use mortgages, but have adapted them to be more like trust deeds.
If it is a trust deed - then it is a done deal. It is owned by the bank and the estate/family are out of the picture. In that case, they have no say or rights.
Each state has a preferred form, whether that is a mortgage or trust deed. Many states use both forms though one is preferred. Some states have a different form other than those two, but that probably doesn’t apply here. Being a bank, they would have used either a trust deed or a mortgage.
A quick call to a title company will familiarize you with the state forms. Also a check at the county recorder’s would find either a “Sheriff’s deed” or a “Trustee’s Deed”. Judicial foreclosure of a mortgage ends up in a Sheriff’s Deed. Foreclosure of a Trust Deed happens through an attorney or service that exercises the “power of sale” clause in the deed. No court is involved.
In almost all cases a foreclosure is a done deal, but it can be overturned by a court or dragged into a bankruptcy. Rare, but it happens.