When a borrower defaults on a mortgage loan, the law allows the lender to foreclose on the property to recoup losses. Lenders define the loan terms in the mortgage, which borrowers must follow to avoid default. In the event of default, the lender uses the borrower’s failure to comply with the mortgage agreement as grounds for selling the property in a foreclosure process. The process generally takes 60 to 90 days to complete in Georgia and sales typically take place at county courthouses.
The majority of Georgia foreclosures follow a non-judicial process, which allows the lien-holder to gain possession of a property without involving the courts. In a non-judicial foreclosure, the mortgage must include a “power of sale” clause. This clause stipulates that, in the event of default, the borrower agrees that the lender can sell the property without court action. While the foreclosure does not require a court hearing, Georgia law defines strict guidelines for lenders to follow.
Foreclosure proceedings typically can begin after a loan reaches a 90-day delinquency. The majority of loans are held by large investment companies or mortgage lenders, which can extend the process of beginning a foreclosure. Prior to beginning a foreclosure, the law requires the lender to deliver a demand letter to the borrower. The letter requests all delinquent funds and gives the borrower 10 days to make payment.
After allowing the borrower 10 days to pay the outstanding balance, the lender can proceed to the next step of the foreclosure process. The law requires the lender to publish a notice in the newspaper within the same county as the property. The lender must continue to publish the notice for four consecutive weeks prior to the intended foreclosure sale. The lender must also send a notice to the borrower at least 30 days prior to the sale; the notice must include the mortgage information, borrower and lender names, property description and the date, location and time of the sale.
Sale of Property
Foreclosure sales in Georgia typically take place at the courthouse in the same county as the property location. The law only allows foreclosure sales to occur on the first Tuesday of every month between the hours of 10 a.m. and 4 p.m. Ownership of the property is awarded to the highest bidder and the law allows the lender to bid on the property. In the event of a sale cancellation, the lender must restart the foreclosure process from the beginning.
Right of Redemption
The state of Georgia does not allow a right of redemption, which would allow the borrower to reclaim the property after the foreclosure sale. At the end of the foreclosure sale, the new owner pays for the property and assumes ownership.
In the event the foreclosure sale fails to yield a sale price sufficient to satisfy the outstanding debt, the lender can obtain a deficiency judgment from the court within 30 days of the sale. A deficiency judgment holds the borrower liable for the difference between the sale price and the outstanding balance.