Foreclosure in United States
- 1 Foreclosure in United States
- 1.1 Foreclosure Definition
- 1.2 Plain-English Law
- 1.3 Practical Information
- 220.127.116.11 A proceeding against property securing a debt, brought upon default (in U.S. law), to cut off the mortgagor’s equitable right to redeem the property (see redemption (in U.S. law)). The most common method is by foreclosure suit in a court of equity (in U.S. law). In a few states foreclosure may also be effected by exercise of a power of sale given in the mortgage (Colorado, for example), by entry and possession (New Hampshire, for example), or by writ of entry (Maine, for example). The mortgage may provide that the holder of the mortgage is entitled to the appointment of a receiver in any action to foreclose it.
- 1.3.1 Foreclosure procedure
- 1.3.2 Parties to a Foreclosure Action
- 1.3.3 Filing and service of lis pendent, summons, and complaint
- 1.3.4 Follow-up of process service
- 1.3.5 Other steps in foreclosure proceedings
- 1.4 Foreclosure Relief Scams
- 1.5 Real Property Pre-Foreclosure Records–Individual State Database
- 1.6 Resources
To shut out; to bar. Used of the process of destroying an equity of redemption. 1 Washb. Real Prop. 589; Daniell, Ch. Pr. 1204; Coote, Mortg. 511; 9 Cow. (N. Y.) 382. A proceeding in chancery by which the mortgagor’s right of redemption of the mortgaged premises is barred or closed forever. In the more comprehensive sense which modern usage requires, any proceeding by which mortgaged property is applied to the payment of the mortgage debt, and the equity of the mortgagor therein barred. As so defined, foreclosure is divided into:
(1) Strict foreclosure, being foreclosure by a proceeding in chancery, by which the equity of redemption is barred within a certain time, and the title of the mortgagee becomes absolute.
(2) By entry, by the act of the mortgagee taking possession either by his own peaceable act, or under writ of entry.
(3) By sale, being by an action for the judicial sale of the mortgaged property, and the application of the proceeds to the payment of the mortgage debt. Sometimes called foreclosure by action.
(4) By advertisement, being a sale under a power of sale in the mortgage, notice thereof being given by advertisement. Sometimes called foreclosure under power of sale. The two first-named varieties are practically unused in the United States, though they exist in a few states.
The forced sale of real estate to pay off a home loan or home equity loan on which the owner of the property has defaulted.
A proceeding against property securing a debt, brought upon default (in U.S. law), to cut off the mortgagor’s equitable right to redeem the property (see redemption (in U.S. law)). The most common method is by foreclosure suit in a court of equity (in U.S. law). In a few states foreclosure may also be effected by exercise of a power of sale given in the mortgage (Colorado, for example), by entry and possession (New Hampshire, for example), or by writ of entry (Maine, for example). The mortgage may provide that the holder of the mortgage is entitled to the appointment of a receiver in any action to foreclose it.
Parties to a Foreclosure Action
Filing and service of lis pendent, summons, and complaint
After the lis pendent, summons, and complaint are prepared, the procedure is the same as in any civil action. The notice of lis pendent must be filed with the proper county official (the official varies with the jurisdiction); the summons is issued for service and the complaint is filed with the clerk of the court (in U.S. law). The summons and complaint must be served on the defendants within a specified time after the lis pendent is filed.
Follow-up of process service
Follow-up of process service is necessary in all civil actions, but is particularly important in foreclosure actions because of the number of defendants. Numerous foreclosure actions are delayed because service of process is lax.. (See also notice (in U.S. law) of Appeal, Service on Opposing Counsel.)
Other steps in foreclosure proceedings
After the summons, complaint, and lis pendent have been filed and served, the procedure in foreclosure litigation varies. The following steps are among those that will have to be taken, depending upon the jurisdiction and the circumstances of the case.
1. Application for receivership. If the property involved is income producing, the plaintiff will ask for the appointment of a receiver to collect the income and make the necessary disbursements.
2. Application for appointment of guardian ad litem. If the parent of an infant defendant will not ask for the appointment of a guardian ad litem, the plaintiff does.
3. Ex parte motion to obtain leave to sue “arm of court,” such as a trustee in bankruptcy (in U.S. law).
4. Entry of default (in U.S. law) judgment.
5. Reference to compute or reference to master in chancery.
6. Hearing before referee or master. Papers to take to the hearings may include:
(a) Referee’s oath,
(b) Referee’s report ready for signature,
(c) Bond or note,
(f) True copies or photocopies of (c), (d), and (e), so the originals may be withdrawn when the hearing is over,
(g) Receipted bills for taxes, assessments, water rates, penalties or interest, if any, paid by mortgagee,
(h) Receipt for payment of insurance if paid by mortgagee,
(i) Summons with affidavit of service,
(j) Check to order of referee.
7. Judgment or decree (in U.S. law) of foreclosure and sale.
8. Publication of notice of sale.
(Revised by Ann De Vries)
Foreclosure Relief Scams
By Eric Berkowitz: He is a San Francisco-based attorney and author of Sex and Punishment: Four Thousand Years of Judging Desire (Counterpoint, 2012).
To protect unsuspecting homeowners, the State Bar, the state Attorney General’s office, the Department of Real Estate, various district attorneys and U.S. Attorneys’ offices, and now the new federal Consumer Financial Protection Bureau have been stepping up enforcement efforts against foreclosure relief scams. Setting up task forces, issuing consumer warnings, and filing lawsuits, these various agencies have brought down operations across California. But as long as troubled homeowners have hopes of keeping a roof over their heads, unscrupulous people will try to profit from their distress.
two Southern California attorneys, Mitchell J. Stein (who also calls himself “The Doberman”) and Philip A. Kramer. The pair presided over an operation that employed about 100 marketers to send millions of official-looking mailers to distressed homeowners, inviting them to become “named plaintiffs” in litigation that would result in either a big settlement or loan forgiveness. When the homeowners responded, the marketers would instead persuade them to participate in flimsy mass joinder lawsuits, charging them fees of $3,500 to $10,000 apiece.
All of this came to light in August 2011, when the state Attorney General’s office, acting jointly with the State Bar, shut the operation down.
Since then Kramer, now disbarred, has admitted to collecting illegal fees, failing to return advance fees, and accepting employment in states where he is not admitted to practice law. Kramer also agreed to pay restitution of about $122,000 to 27 former clients. (In the Matter of Kramer, No. 10-0-4002 (stipulation filed Apr. 13, 2012).) His colleague Stein, however, remains defiant, filing no fewer than six lawsuits against various branches of the state and federal government. Stein claims, among other things, that his civil rights were violated and that when Attorney General Kamala Harris acted against him she was merely doing the bidding of Bank of America. In late 2011 the State Bar placed him on involuntary inactive enrollment. (In the Matter of Stein, No. 11-TR-18758, order filed Dec. 29, 2011.)
Another big scam that investigators zeroed in on was orchestrated by US Legal Advisors, the operation that Marin County attorney Sharon Lapin latched on to. After seeing US Legal’s job posting, Lapin learned that the company’s chief counsel was James Sandison, an old law school chum. She met with him in Sacramento and subsequently started working for him as an independent contractor in August 2009.
Within weeks of taking the job, Lapin, who worked out of her houseboat, had filed about 130 actions in federal courts around the state. Marketers would lure the clients using a new form of flim-flam called forensic loan audits (FLAs), which were packaged as home loan analyses to get around the Civil Code sections (2944.7 and 2945.4) that prohibited lawyers from charging up-front fees for loan modification or consulting services. These FLAs, though, were usually worthless documents spat out of computers operated by nonlawyers, used chiefly by marketers to up-sell homeowners into filing lawsuits.
Since the audits almost always found irregularities in the loans, Lapin had a lot of work filing lawsuits – so much, apparently, that she didn’t have much time to communicate with the clients. But US Legal nevertheless charged them for her services (usually half of the monthly mortgage amount, which it auto-debited from their bank accounts each month). In turn, Lapin was paid $250 per client per month, for “costs,” which over 14 months totaled about $177,000. She kept no time sheets or records to justify the reimbursements.
Soon enough, Lapin was inundated with motions to dismiss these cookie-cutter complaints. And by early 2010, she recalls, “it all hit the roof.”
In November 2012, after Lapin had missed court filing deadlines in nearly 20 cases, the State Bar Court formally approved her disbarment. “She has no remorse and does not accept responsibility for her actions,” Judge Lucy Armendariz wrote in her decision after an eleven-day disciplinary trial last summer. “She continued to make excuses and rationalized her fraud.” (In the Matter of Lapin, No 10-0-3758, order filed Nov. 7, 2012.)
Sandison, US Legal’s chief counsel, has been disbarred as well. He insists that the company’s biggest mistake was having too high a profile. “Instead of going to people and saying, ‘Let us audit your loans,’ and giving cases to attorneys, we should have stayed more in the background,” he says.
Real Property Pre-Foreclosure Records–Individual State Database
This is a database related to interests in and transfers of real estate, in the following material: Public Records and Filings. A description of this real estate database is provided below:
Pre-foreclosure documents filed with county recorders in selected counties in 34 states: AK, AR, AZ, CA, CO, CT, FL, GA, HI, ID, IL, KY, LA, MD, MI, MN, MO, MT, NC, NE, NJ, NM, NV, NY, OH, OK, OR, PA, RI, TN, TX, UT, WA, and WI, and the District of Columbia. Depending on the foreclosure process applicable in each state, the documents may include final judgments of foreclosure, notices of lis pendens, releases of lis pendens, notices of default, and notices of trustee's sale. Coverage varies by county. Records from individual states are found in databases with the identifier RPF-XX, where XX is a state's two-letter postal abbreviation. RPF-ALL, RPF-CT, RPF-DC, RPF-KY, RPF-LA, RPF-MD, RPF-NY, RPF-OH, RPF-PA, RPF-RI, and RPF-TN are not available to law school subscribers.
Further information on United States legal research databases, including real property databases, are provided following the former link.
- Legal Topics.
- Foreclosure Procedure
- Foreclosure Parties
- Multifamily Mortgage Foreclosure Act Of 1981
- Deed In Lieu Of Foreclosure
- Private Mortgage Insurance
- US 2007 Enacted Foreclosure Legislation Resources
- US 2008 Enacted Foreclosure Legislation Resources
- Bill For Foreclosure
Further Reading (Books)
- Information about Foreclosure in the Gale Encyclopedia of American Law.
Further Reading (Articles)
Foreclosures Continue to Boom., Mortgage Servicing News; May 1, 2009
Foreclosures Down in Jan., National Mortgage News; February 16, 2009
FORECLOSURES UP NEARLY 53% FROM AUGUST 2005., Worldwide Databases; October 1, 2006
Foreclosure metrics., Economic Commentary (Cleveland); April 1, 2009; Dunne, Timothy Venkatu, Guhan
Foreclosures In/foreclosures Out, Mortgage Banking; April 1, 2012; Blecher, Herb
FORECLOSURE ACTIVITY UP 48% FROM MAY 2007., Worldwide Databases; July 1, 2008
Foreclosures High in Midwest: ‘In Chicago, the level of foreclosure activity is more than double the national average.’., National Mortgage News; September 18, 2006; Harmon, Jennifer
Foreclosures double from a year ago, New Orleans CityBusiness; November 1, 2007
Foreclosures Down Because of ‘Robo-Gate’., Mortgage Servicing News; January 3, 2011; Harmon, Jennifer
Foreclosures hit ritzy homes, too Douglas County latest casualty of market in Q1.(Business), Rocky Mountain News (Denver, CO); May 16, 2008; Rebchook, John
Foreclosures Down by 4% in May as Texas Leads the Nation., Mortgage Line; June 27, 2005; Link, Monica
Foreclosures Up 81%., National Mortgage News; January 19, 2009
Foreclosure Numbers Boom Again.(News), National Mortgage News; March 16, 2009
Foreclosures grow, reversing trend, Journal of Business; January 24, 2008; McLean, Mike
Foreclosures might swamp isle courts, Honolulu Star – Advertiser; June 15, 2011; Gomes, Andrew
Foreclosures log only modest drop, Honolulu Star – Advertiser; June 16, 2011; Gomes, Andrew
Foreclosures up, but situation is improving, The Sun – Naperville (IL); January 27, 2013
Foreclosures Drop in 2012, Daily Herald (Arlington Heights, IL); January 17, 2013
Foreclosures May Be Driving the Rise in Suicides, The Washington Post; May 20, 2014; Badger, Emily
Foreclosure pace is slowing down, Deseret News (Salt Lake City); March 11, 2010; Alan Zibel Associated Press