Mortgage Foreclosures Practice Area

Foreclosure Resources Foreclosure Glossary

Mortgage Foreclosures are a more complicated form of action to collect a debt. When a debtor has made a naked promised to pay a creditor, the most the creditor can do in a law suit to recover the money is to receive a "judgment" against the debtor. Since we do not have debtors prisons in the United States, the judgment often turns out to be of no economic value.

In a Mortgage situation, where the borrower has pledged real property as security for the debt, both the debt and the mortgage, along with the default, must be proven in court, but a judgment in favor of the creditor reads something like "Debtor is required to pay Creditor the sum of XXX dollars, within 30 days, OR BLACKACRE WILL BE SOLD AT PUBLIC AUCTION, and the proceeds of sale will be used to pay this judgment".

If, after 30 days, the judgment debt has not been paid, the real property is auctioned off, for cash, to the public. The creditor is allowed to bid his judgment amount (or more) for the property. If someone bids more than the judgment amount, the property is sold to the highest bidder. The proceeds of sale are used to first pay the clerk's cost of sale, then to pay the creditor his judgment award, and, if any moneys remain, they are returned to the debtor.

The creditor's judgment usually includes all payments due under the promise, with interest, costs, and attorney's fees. Once the suit is filed, the debtor loses the right to make up the late payments. The suit will be for the total amount of the debt, plus fees and costs.

Sometimes the lender will allow the debtor to pay late charges, past due payments, fees, and costs, and let the debtor resume making payments as in the original agreement. Since this is entirely up to the lender, one should never get behind on his or her mortgage payments, especially on your home.

Please contact us with your questions or comments.

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