The Foreclosure Crisis

The law provides a chance to mortgage, lease or rent a property. In case of defaults in payments as per the contractual agreements, the constitution through the courts of law stipulates that the actions of foreclosure be taken. This law is uniform in several states in the United States. There are also provisions that protect the mortgaged property from unfair foreclosures. Foreclosure is a legal concept that has existed for many years. It involves the legally binding actions of the third party lien holder to take control of the default in the mortgaged property and sell them so that the funds can be used to service the mortgage .This legal concept has evolved over time as it used to involve automatic take over by the mortgagee but it now allows
the mortgagor some humble time to clear the mortgage before the process takes place.
The United States legal structure has a well-articulated legal structure that works to protect both players in the mortgage agreement. It is meant to prevent any fraudulent dealings in the transactions .Although there are slight variations in the foreclosure requirements by the different states, the underlying factors remain the same.
The mortgage holder can always call for the foreclosure anytime in case of default payments of the mortgage. There are several aspects of these legal actions, however, only two are widely known while the rest applies only in some specific states. Judicial Sale foreclosure is the most important of them all. This is done under the supervision of the court of law. It involves pleadings in the chambers and the court makes decisions after a series of trials. The precedes in this case is distributed in such a way that the mortgage is settled first then any other party involved and the balance goes to the mortgagor.
The next type of foreclosure actions involves the full powers of the mortgagee to sell the property and compensate himself without the inclusion of the courts of law in the process. This approach is more expedient than the latter and surprisingly, many states will prefer it that the one involving legal sanctions .The precedes in this case is distributed like in the judicial foreclosure. The other approaches are considered minor and hence not applied on large scale. A good example includes the strict foreclosure, this is mostly used in New Hampshire and Vermont and it involves court orders although it does not fully involve the actions of the court. The mortgagee in this case is ordered to allow some time so that the mortgagor can get some funds to settle the mortgage, in case the timeline elapses and the mortgagor fails to comply, the mortgagee takes charge and gains title of the property without even selling it.
The impacts of foreclosures bites not only the parties involved in the actions of the foreclosure but the community at large.
States with high cases of this kind of foreclosure have seen increased criminal activity at these houses are being broken into and other malpractice such as prostitution (Immergluck 2009).The case of a foreclosed property will greatly affect the sale value of the neighboring properties. This in turn results to high and extreme case of housing problems. Switching schools due to misplaced families affect the performance of young ones as they find it hard to settle. A study of 250 selected participants brought out that people who experience foreclosures experience physical and emotional distress as (Pollack & Lynch
2009).
There have been fourteen amendments with a debatable nexus on the actions of foreclosures.
In these, two federal laws are seen to directly affect the foreclosure actions. Injunctions on any case of bankruptcy are an automatic foreclosure regardless of the type. In this case the mortgagor`s right to equity in the property that is being mortgaged determines whether the stay will be lifted or not. In case the bankruptcy has been petitioned under Chapters 11, the court on bankruptcy may nullify, change or direct such stay on cause .This directions include the unavailability of enough protection of an interest in the mortgage holder`s property, or in the case that the mortgagor lacks equity in the property and the same property is not a necessity for an efficient rearrangement.
The Soldiers and Sailors Relief Act of 1940 gives a special and unique protection to mortgagors in their line of duty in the forces for the mortgage loans that were executed before these individual went into the forces. The act provides a special protection on the service men as they can request for default judgement which leads to a foreclosure action. In respect to this provision, the mortgage holder with this case must file an affidavit with the courts of law with a clear statement that the mortgagor has failed to honor the foreclosure complain and they are not actively engaged in the
service.
In this case, if the mortgagor is in the forces, the subject must avail themselves in the hearing or get a representation which means that the foreclosure by the power sale is unavailable. If the courts of law discover that the abilities of the mortgagor to comply by the terms of the mortgage have been hampered by their presence in the service in the forces, they can enjoy the ire stay in the foreclosure action as long as they are in the armed forces.
The tenants of a foreclosed property enjoy the protection from eviction from the foreclosed properties as effected on May the 20th in the year 2009.This provision was meant to expire on 31st December 2012, The Consumer Protection Act and the Dodd-Frank Wall Street Reform extended the expiration dates to 31st December 2014 (Berson & Berson2012).In this case, the tenancy protection applies to any mortgage loan that is federal related or a residential property. They exist under the provision that “any immediate successor in interest” in any foreclosed property, including a financial institution that assumes the title to a property after the foreclosure, will instantly assume the interests following the rights of any possible “bona fide” tenancy and will be compelled to comply by the certain requirements as per the notice.
Under this provision, the immediate party who succeeds in the interest of a dwelling place or a residential property must make available a notice of vacation of not less than 90 days .The dates indicated in the foreclosure documents is identified as the time on which the title of the property completely transfers to the succeeding entity in accordance to the court requirements.
However, there are exceptions that permit tenants to continue staying in their residence until the final day of their leases; When the ownership of the property in question is transferred to a purchaser who then assumes occupancy of the said property as a primary residence or when there is absence of lease or if present, it is terminable under the laws of the state .Nevertheless, even with these exceptions, the tenants are entitled to at least a notice of 90 days before they are evicted. It is important to note that this law is applicable to tenants under a “bona fide” tenancy. Foreclosure is a legal action that instills discipline incase on opts to borrow or leave a property. Among the various types of foreclosures, it is advisable to embrace the choice that does not give the mortgagee full power to take charge of your property. The situation is now fair as there are legal aspects that protect one from unfair foreclosure practices .However; this is detrimental as externalities can result to one being displaced and property taken.