Facing foreclosure is stressful enough, but depending on the state you live in, you may not even get a date in court in order to defend yourself. This is possible in states that allow for a non-judicial foreclosure, which is over half of the states in the country. But it's not just the type of foreclosure favored and allowed in the state, but also what's written in the mortgage paperwork you signed when purchasing the home. If it includes a clause allowing for the power of sale, you're facing a very difficult foreclosure scenario and will definitely need the help of an attorney.
Lack of Warning
When non-judicial foreclosure processes are combined with a power of sale clause, there is very little notification required from the mortgage holder to you as the home owner. Each state is different, but many allow for a single public notice or just one mailed warning before the sale can proceed. Other areas even allow for a sale to be set with no warning at all to you aside from a general statement of foreclosure. Since other states that require a judicial process can stretch out a foreclosure process into a multi-year event, having your home go up for sale with practically no warning can make it hard to fight back if you're expecting that kind of treatment as well.
Limited Options to Fight
Since there's no automatic court date set to kick off the foreclosure process with a power of sale clause, your options for fighting the proceedings as unfair are even more limited than usual. You have to take action outside of the court, such as negotiating directly with the mortgage holder for an alternative payment plan. You still have the right to start a case against the mortgage holder if you think the foreclosure is incorrect or illegal, and that's your main option for bringing the courts into the process in a non-judicial state. Since there are tighter deadlines and fewer steps between your missed payment and the sale of the home, it's essential to act quickly and make a plan as soon as you know you're at risk for foreclosure.
Tough to Defend Against
States that allow for non-judicial foreclosures already give mortgage holders a lot of rights to speed along a sale and give you limited chances to fight back. However, adding a power of sale clause to a mortgage even further reduces your rights to build a defense against the process. In fact, it's this very problem that has led to numerous debates over the constitutionality of these clauses and non-judicial foreclosures in general. There are many specific defenses for slowing down the speed of a power of sale, such as finding other lien holders and parties with interest in the mortgage that must be notified before the sale can continue. However, you'll need the help of an attorney to properly utilize these techniques and get everything necessary done in time to save your home.
Relief from Deficiency
There is a single benefit to the homeowner facing foreclosure when there's a power of sale clause in the mortgage paperwork. With other forms of foreclosure, the mortgage holder retains their right to sue you for additional payment if they don't receive enough money from the short sale in order to satisfy the amount of the loan. When the mortgage holder chooses to pursue a non-judicial sale and they invoke the power of sale clause, they cannot make a claim of deficiency later in most states. If you don't have the means to stop the foreclosure, at least you will not have to worry about a secondary court case and the potential of losing anything more.Share