Cambridge is a City in the Middlesex County, Massachusetts. Foreclosure is the resolution secured lenders arrive at when a homeowner is unable to stay current in their mortgage payments for a given period of time; because of the financial implications of foreclosure a struggling debtor should first try negotiating with the lender a way forward during the difficult time. Foreclosures most of the time stands to benefit neither the creditors nor the borrower but the greater harm is to the debtor because it will damage his/credit ranking. Deficiency judgments are likely to follow among others
Types of foreclosures
The lender has to first obtain a court judgment for them to foreclose on the debtor’s property. Once he/she has obtained the judgment in their favor an auction date is set and the whole process will be conducted by the sheriff who will sell it to the highest bidder. Since it is allowed along with its counterpart most lenders prefer the non judicial procedure thus it is usually applied when the power of sale clause is absent in the mortgage contract or in the deed of trust.
It does not require the intervention of the court as that is dismissed by the presence of the power of sale clause in the agreement or deed of trust. Power of sale signifies that the borrower preauthorized the sale of the property in the event they can no longer continue making payments, in order for the lender to recover the debt.
Power of sale guidelines
This is where the power of sale is included in the deed of trust or the mortgage. The date, place and terms of sale are specified and the following procedure should be adhered to:
- A notice of sale should be served to the debtor in default to his last known address at least 20 days prior to the foreclosure date and this notice is also to be published on the print media, the county newspaper.
- The sale is to be conducted by the trustee at a public auction for cash to the highest bidder, anyone is welcome to bid inclusive of the lender and should the lender be the winner the borrower will have 12months to redeem the home.
Foreclosures as an investment
Foreclosures present investment opportunities due to the fact that they are frequently sold for lesser amount than the current market value so as to attract the market due the urgencies as most lenders want to get these properties off their books. The investor stands to get financial gains due the discount offered and with a few home upgrades the value of the home will appreciate however there still maybe a chance that the disadvantages of buying a distressed home may out way the benefits thus thorough due diligence should be carried out when considering foreclosures as an investment so as to avoid inherited burdens such as debts connected to the home, unpaid tax obligations, construction loans or home equity lines of credit among other issues.