Foreclosure Steps in Ohio Law
A foreclosure may occur when the borrower of a mortgage loan is unable to meet the financial obligations specified in the mortgage contract. At this point, the lending agent has the right to seize the property and sell it to the highest bidder. In Ohio, this process takes approximately 150 to 180 days to complete.
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Theory of Ownership
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In Ohio, foreclosure laws are formed around the lien theory of property ownership. This states that the property in the mortgage loan is collateral to secure the loan. The property itself is still the property of the borrower. The mortgage places a lien on the property, which is removed once the contract is fulfilled.
Judicial Foreclosure Method
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The judicial foreclosure method requires the lending agent to file a lawsuit for payment of the past-due amounts. The court will usually set a deadline for payment. If the delinquent payments are not made, then the court will order the home to be auctioned to the highest bidder. Once the foreclosure is authorized, the lender must obtain an appraisal on the property. The auction must yield a price of at least two-thirds of this amount.
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Deficiency
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A deficiency occurs when the property sells for less than the balance due on the mortgage loan. When this happens, the lending agent has the right to sue the borrower for the deficient balance. This deficiency suit must be filed before the court confirms the sale of the property.
Last Chance
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The state of Ohio allows the borrower one final opportunity to keep the property, even after the auction is completed. This can be accomplished by paying the entire loan balance, plus any costs associated with the foreclosure, before the court confirms the sale.
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