The Steps of Foreclosure in Indiana
A foreclosure may occur when the borrower is unable to meet the financial obligations that were agreed to in the mortgage contract. At this point the lending agent has the authority to reclaim the property and sell it at auction to the highest bidder. In Indiana, the foreclosure process typically takes 150 to 200 days to complete.
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Theory of Ownership
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Indiana's foreclosure process is based on the lien theory of property ownership. This theory states that a mortgage contract uses the property as collateral, but the borrower maintains ownership of the property. The contract establishes a lien on the property that is removed once the mortgage contract has been completely fulfilled.
Foreclosure Method
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Indiana only recognizes the judicial foreclosure method. This requires the lending agent to file a lawsuit against the borrower for the delinquent amount. The court typically gives the borrower another chance to make the necessary payments. If these payments are not made on time, then the court will issue an order to foreclose the property and sell it at auction to the highest bidder. However, the court also mandates a waiting period before the auction may be held.
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Procedures
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Indiana has certain requirements that must be met before the foreclosure may be completed. The court-mandated waiting period ranges from three to 12 months, depending on the date the mortgage was signed. The borrower has the option to waive this time period so foreclosure proceedings may commence immediately. An advertisement must appear in the local newspaper at least once per week for three weeks. The first notice must appear at least 30 days before the sale. The borrower must receive notice at the same time the first advertisement appears in the paper.
Deficiency
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When the home is sold for less than the balance due on the loan, then a deficiency has occurred. In this situation, the lending agent has the right to sue the borrower for this deficient amount. If the borrower waived the waiting period, then the lender loses the right to file the deficiency suit.
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