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The ability of a lender to foreclose on a residential or commercial property generally stems from the original mortgage document and promissory note signed by a purchaser of property in favor of a lender. The original mortgage document and promissory note is typically used as the catalyst for a foreclosure. Or, in some circumstances, a lender may have the right to foreclosure on an equity line of credit (secured by the real property subject to foreclosure) that was taken out by a homeowner at some point after purchasing the property.

A mortgage originates from a bank that typically looks at the financial position of a borrower and ensures that such borrower can make the requisite payments on the home. After the due diligence process occurs, the lender typically drafts a mortgage document (contract) that stipulates the terms of the loan and/or actions that would result in a breach of contract of the mortgage on the part of the purchaser as well as the lender. In most cases, this mortgage document is not negotiable, however, in some cases the terms may be negotiated. For instance, the mortgage document usually has provisions for making timely monthly payments of principal, interest, taxes and homeowner’s insurance. Failure to make payments of any of the above items (principal, interest, taxes and homeowner’s insurance) in the manner prescribed by the mortgage document may lead to a breach of contract claim by the lender and the ability of the lender to foreclosure on the subject property. Similarly, if the lender does not properly escrow a property owner’s taxes and homeowner’s insurance, this can serve as a defense in a breach of contract or foreclosure claim and/or service as a possible cause of action against the lender. The mortgage document works very closely with the promissory note, which will be outlined in the following week’s blog.

Contact the attorneys of The Ticktin Law Group to assist you with foreclosure defense action and/or any other legal matter you, a friend or a loved one may have. The attorneys of The Ticktin Law Group offer complimentary legal consultations.

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