Title Theory Versus Lien Theory
Different states throughout the United States utilize two basic concepts when it comes to property ownership. The first concept is known as title theory. In title theory of the lender has the right to assume instant possession of the mortgage property when the borrower defaults. Once the lender assumes the properties of property can be sold.
The second concept is known as lien theory. Lien theory requires the lender to foreclose on a lien on the property in the court of the jurisdiction relevant to the transaction. Only a court action can give them the ability to acquire possession of the property. At that point the property can be offered up for sale and the funds from the sale can be used to extinguish the debt.
In both lien theory and title theory if there is any money left over from the sale after the debt has been paid, the Boer war is entitled to receive that money. If the lender has to spend any money to sell the property, these are known as cost of sale, the lender can recoup that expense is well before the borrower receives any money from the sale. The sales are often managed by a representative of the court, typically known as an executor. Unfortunately, lenders are often in a hurry to recoup their losses and avoid further risk. Sales often happen fast and with minimal effort. Excess funds during a sale are not always common.
If an owner had a large amount of escrow in their home, they could potentially have refinanced and avoided the foreclosures in the first place. So banks or lenders often end up selling homes at an amount just above what they need to cover their unpaid debt, leaving very little if anything for the borrower. Monitoring the behaviors of the parties during a sale will typically yield little benefit. Its difficult to prove that lenders are doing anything wrong when they take no effort to fix up a home for sale and give it enough curb appeal to garnish a better rate. A lender can hardly be expected to put more good money after what is already proven to be bad.
Similarly, home owners that have lost their homes often do not want to give up the property and their efforts to delay exit or foreclosure can also harm the ability of the home to sell at a good price. The two sides in these case can become embroiled in arguments and controversy, even engaging lawyers and private investigators armed with a telephoto spy camera, but it rarely amounts to anything useful for either side.
