What Are Indiana's Foreclosure Laws?
Foreclosure law in Indiana provides one legal route for mortgage lenders and other financial institutions to enact foreclosure proceedings against borrowers. This ensures that all foreclosures in the state are reviewed by the court system. It is hoped these procedures catch any impropriety by mortgage lenders who may be trying to push homeowners through the foreclosure process.
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Judicial Foreclosure Regulations
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The only legal method of foreclosure in Indiana is judicial foreclosure. This legal procedure requires your lender to sue you in civil court to obtain a judgment of possession. At the foreclosure hearing, all the lender is required to prove is your delinquency and inability to bring the mortgage current. Once the lender has possession of the property, a public auction is held where the home is sold to the highest bidder. Nonjudicial foreclosure is not available in Indiana. It is illegal for a lender to attempt to repossess a home without a court order.
Sale of Property
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According to Foreclosure Law's website, a mortgage company or other lender is required to wait a certain amount of time once possession of a foreclosed property is granted by the court before commencing with the public auction. The total amount of time varies from when the mortgage document was originally signed. Usually, the wait time is anywhere from three to 12 months. A lender may file for a motion with the court to waive this wait period. If the lender chooses to file for a waiver, he may not pursue the former homeowner for a deficiency judgment once the sale takes place.
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Deficiency Judgments
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At the foreclosure of the property, the lender is required to accept the highest bidder for the property. The amount paid at auction for the home may not always be enough to cover the former owner's mortgage. In this case, the lender may sue the former homeowner in civil court to recover the difference between the sale price of the home and the total amount of the mortgage. This could leave the borrower without a home and still owing his former mortgage company tens of thousands of dollars.
Right of Redemption
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Indiana allows a homeowner who has been foreclosed on to retain the right of redemption up until the new owner takes possession of the property. The right of redemption allows the former homeowner to pay his mortgage company the remaining balance of his mortgage and retain possession of his property. This is a great financial undertaking, so it's rare that a homeowner is able to come up with enough cash to retake the property.
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