A somewhat faster foreclosure process is the biggest advantage to a lender who uses the power-of-sale method of foreclosure.
What Is a Power of Sale?
A power of sale is a clause written into a mortgage note authorizing the mortgagee to sell the property in the event of default in order to repay the mortgage debt. Power of sale is permitted in many states as part of a lender's rights to seek a foreclosure.
Power of sale is a mortgage clause that permits the lender to foreclose on and sell a property in default in order to recover the remainder of the loan.
This clause, which is legal in many U.S. states, allows for a foreclosure process that circumvents the courts for speedier outcomes.
If a mortgage also contains a right of redemption, the borrower in default can recover their property by paying back all interest and principal due as well as all foreclosure costs, or the foreclosure sale price plus fees.
Understanding a Power of Sale
The power of sale clause invokes the right of foreclosure, which describes a lender's ability to take possession of a property through a legal process called foreclosure. Lenders may use their right of foreclosure when a homeowner defaults on their mortgage payments. The mortgage’s terms will outline the conditions under which the lender has the right to foreclose. State and national laws also regulate the right of foreclosure.
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