Saturday, July 10, 2010

Why is the foreclosure process so much faster in some states than others?

Why is there such a difference in the time it takes to be foreclosed? Basically, it is because the United States is divided into two types of states: lien theory states and title theory states.
Florida is one example of a lien theory state and it is also known as a judicial state because the borrower gets the deed to the house at closing and so the lender has to go to court and go through a complex foreclosure process in order to claim possession of the property. The process starts with the lender filing a complaint and recording a notice of Lis Pendens. Once the homeowner receives the complaint they have the right to be represented by an attorney and the opportunity to be heard in court and this can delay the process considerably because some courts have a large backlog of cases and a good attorney might be able to cause multiple delays.

Georgia is an example of a title theory state and these types of states are known as non-judicial states because the lender keeps the deed after closing and the homeowner only gets it when the loan is satisfied. The lender does not need to go to court in non-judicial states because they already have the deed. Instead, the homeowner who is in default will be mailed a notice and if the homeowner does not pay what is owed a notice of sale is sent to the homeowner and the property is listed at auction. Timeframes for the various steps are set by the individual state laws.

Click on the link to view the map of the states and see how the country is divided. As a property owner you are probably better off in a lien theory state during hard financial times.

Come on down to South Florida and buy some property!

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