Mortgage foreclosure law variations

It pays to know what type of mortgage you have. What comes to mind first is the kind of home loan program you opted for. Whether it's a fixed rate product or an ARM of some sort, look up the details. If you happen to have an ARM, it's good to be aware of when it resets, like does it do it annually, every three years or when. Learn the index that's being used, and the margin.

Now that foreclosures are rising across the land, it's equally important to know what kind of a financial instrument secures the loan to your property. Is it a conventional mortgage or a deed of trust? They fulfill the same role in real estate purchases, but are quite different from the legal point of view.

Here's the difference between the two. A mortgage involves only two parties, namely the lender and the borrower, whereas a deed of trust has an extra party to it, a trustee, who holds title to the home until the debt is satisfied.

Let's say a loan goes delinquent and the legal instrument is a mortgage, typically in this case the lender would have to go to court to begin foreclosure proceedings. Doing that always takes time, a lot of it. Everybody knows that. But if the instrument is a deed of trust, the trustee does not need to go to court to get started. This is called a non-judicial foreclosure and now the process can be really fast.

34 states either for the most part or completely employ the deed of trust. Alabama they say is the quick draw champion of all, possibly foreclosing on a delinquent borrower in as little as 30 days. Mississippi and New Hampshire can do it under 60. At the opposite end of the field is New York where it can take over a year. In short, be aware of the legal instrument you are bound by.