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How are power of sale and judicial foreclosure different?

Home mortgage lenders in Oklahoma can use either of two options to begin foreclosure proceedings against homeowners who are behind on their mortgage payments. One if the power of sale method, and the other is judicial foreclosure. This post serves as an introduction to each of these methods.

Power of sale foreclosure: The availability of this means of foreclosure depends on the presence in the home sale agreement of a clause allowing the lender to foreclose on the property without having to go to court. In Oklahoma, before commencing a foreclosure by power of sale the lender must provide the borrower with a 35-day notice period during which the borrower has the opportunity to catch up on the mortgage and to avoid the foreclosure (unless the homeowner has been in prior default it least three times, in which case the notice requirements are relaxed). There are also specific public notice requirements that the lender must comply with. The main advantage of the power of sale foreclosure is its speed relative to the second method, judicial foreclosure.

Judicial foreclosure: If there is no power of sale clause in the home sale agrement or the deed of trust, then the mortgage lender needs to use the judicial foreclosure method. This involves the filing of a lawsuit against the homeower, followed by a public auction of the property. Some characteristics of judicial foreclosure in Oklahoma are that the house may not be sold for less than two-thirds of its appraised value (unless the homeowner waives the appraisal), and if the sale results in a shortfall to the lender then the lender may pursue a deficiency judgment against the homeowner within 90 days after the conclusion of the public auction.

This post is an overview only of the subject of home foreclosure law. Preventing a home foreclosure sale can be accomplished in either of these two foreclosure methods, but correcting the problem that has led to the foreclosure threat must be accomplished in a timely manner (there is no right of redemption in Oklahoma). Securing the assistance of a law firm that practices in the area of debt relief and foreclosure law can help distressed homeowners to understand their rights and their available options if they are facing the prospect of foreclosure.

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