Indiana Foreclosure Procedures
If a homeowner is unable to make payments, as agreed upon in the mortgage contract, the lender can reclaim the property for auction to the highest bidder. This process is referred to as foreclosure. The State of Indiana only recognizes the judicial foreclosure process as a valid means to complete a foreclosure.
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Judicial Foreclosure
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Typically two forms of foreclosure are available. In Indiana, only the judicial process is used. This requires the lender to file a lawsuit against the homeowner, with the intent of receiving a court order mandating the foreclosure. Once the order is issued, the home may be sold at auction after the appropriate waiting period has elapsed.
Waiting Period
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Once the court order is approved, the lender must wait a specified period before proceeding with the sale of the property. This time can range from three to 12 months, depending on the age of the contract. The homeowner can waive the waiting period if the lender is willing to waive its right to a deficiency judgment.
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Process
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Once the waiting period has elapsed, or been waived, an advertisement of the sale must be published in a local newspaper at least once per week for three weeks. The first ad must appear at least 30 days before the sale. A notice must also be provided to the homeowner at this time. The homeowner is allowed to live in the property rent-free until the sale occurs, provided he does not damage it.
Deficiency
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A deficiency occurs when the home is sold for less than the amount still owed on the mortgage. Indiana allows the lender to pursue the former homeowner for payment of this difference, unless the lender has agreed to waive this right in exchange for eliminating the waiting period.
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