Foreclosure Statute of Limitations: Why Logistical Support is Worth the Investment for Lenders
November 16, 2015
Every state has different rules and regulations regarding the timeframe by which a lender must take foreclosure action or lose its right to foreclose. As backlogs of delinquent loans are a common occurrence for lenders, it can take months or even years for red flags to go up.
Lenders have a right to protect their investment, which is why there are allowances for the foreclosure process under the law. However, it must be done in an ethical way that preserves the borrower’s rights — and that is why vital support services such as process servers, bookkeepers and document specialists are worthy investments for title companies and lenders alike.
What Is a Statute of Limitations?
In its most general sense, the term “statute of limitations” refers to a timeframe where one party may begin pursuing legal action against another. Statutes of limitation apply to both criminal and civil cases, and vary by type of action and by state. For example, New York state law uses the general guidelines for any written contract to define the timeframe on mortgage issues, while New Jersey has an entirely separate set of definitions for them. Regardless, the point of the concept is that if the statute of limitations is allowed to expire, the lender is legally considered to have no claim and their right to foreclose is eliminated.
Different in Every State
There are additional regulations that apply to each subset of statutes of limitation. For example, again, New York state law decrees that the foreclosure process must begin at least 90 days before the statute is up with the delivery of a pre-foreclosure notice to the delinquent borrower. This is why it is so important to retain the services of trustworthy support personnel such as process servers to ensure that the requirements are completed on time.
The Foreclosure Process
After the mortgage is accelerated — that is, the entire balance is called due for payment — New York state law decrees that the borrower has six years to begin the foreclosure process. Note that the statute is only pertinent to the start of these proceedings, not their conclusion. Even if the entire process takes longer than the timeframe delineated by the statute of limitations, the claim is still valid.
Lenders who are dealing with delinquent mortgages must be absolutely clear on the details of foreclosure law in their state, particularly with regard to statutes of limitation and their sub-rules and regulations. Otherwise, their entire investment is at risk. Nationwide Court Services prides itself on providing impeccable logistical solutions to lenders, attorneys and title professionals for a wide variety of real estate transactions. Read our blog to learn more about how we customize our support services to every client, or visit our website today.
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