What is the difference between a title theory state and a lin-theory state.
It is important that you understand if the property is subject to the title or liens theory of mortgages when purchasing a foreclosure or bank-owned property from Auction.com.There are considerations on who will hold title and how the proceedings will take place.Let's talk about how a mortgage works.
An acceleration clause that spells out conditions under which the mortgagee can declare that the entire mortgage balance is due and demandable will be included in the installments schedule.The lender can exercise control over the property and pursue repayment of the loan if the monthly balances are not paid.Depending on which set of guidelines for mortgages apply in your state, the foreclosure process varies from state to state.
The buyer will hold the deed to the real estate property for the life of the mortgage.According to the terms of the financing agreement, the buyer will make payments on the mortgage.The buyer holds the title to the property instead of the lender after the mortgage agreement is paid off.When the loan is paid off, the liens are no longer needed.
The lender will be named as the beneficiary of the trust when the buyer issues a Deed of Trust.Should the buyer fail to comply with the terms of the mortgage agreement, the title to the property is held by a third party.According to the terms of the Deed of Trust, the rights of ownership and possession reside with the buyer.When the loan is completely satisfied, the lender issues and records a Deed of Reconveyance in favor of the borrower who will now have clear title to the property.The lender's interests in the property are removed by the Deed of Reconveyance.
The basis of evaluating mortgage laws can be found in a modified version of title and liens theories.The lender can take back the title if the borrower doesn't repay the loan.Impartial states are states that have an asterisk in their names.
Interpretation of mortgage laws depends on the state's status as a title theory jurisdiction.Due-on-sale clauses are usually included in mortgage agreements to prevent the transfer of a mortgage to another party.
Escalation clauses can be triggered by certain events such as the sale of the property.A judicial process is required in states that subscribe to title theories where property ownership is held by the lender.After the lender files a lawsuit and the court issues a judgment against the borrower, a judicial foreclosure can be initiated.The security property can be auctioned off through a public official or a designated representative.The sheriff was in charge of managing the auction on the steps of the courthouse.These auctions were referred to as sheriff's sales.
The Trustee is in charge of the foreclosure proceedings.Judicial foreclosures often take longer than the non-judicial process.The courts don't interact with most non-judicial foreclosures.The power-of-sale clause, which grants the lender the right to proceed with a non-judicial foreclosure, should be included in the original mortgage agreement.
Regardless of which set of mortgage laws apply in your state, a comprehensive resource of auction listings is a useful reference as you build up your real estate investment portfolio.If any of the current listings meet your investment portfolio targets, go to the Auction.com website.
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