We are finding out the hard way in a Contract for Deed we purchased in Alabama about the Power of the Power of Sale Clause. The Power of Sale clause is one of many clauses written into most mortgages which will allow the lender or owner of the mortgage the power to sell the property in the event of a default by the homeowner, in order to pay off the mortgage debt. It is for all purposes the equivalent of a foreclosure, without having to foreclose judicially in non-judicial States.
Although real estate bankruptcy cases no longer dominate the bankruptcy courts' dockets as they did in the early nineties, but they continue to be filed with great frequency in UK. At its essence, the real estate bankruptcy is a two party dispute between mortgagee and mortgagor. Real estate bankruptcy cases are typically filed after a foreclosure sale has been set. Upon learning of the bankruptcy filing, a secured creditor has a number of available options, all or some of which should be exercised, depending on the facts of the case, to maximize loan recovery.
I was driving through a neighborhood on the southeast side of Chicago this past Saturday and I was amazed at how the area had gone down. The area itself was never the best area to live in, but it was a place where people had a sense of pride. As I drove down one particular block, I slowed my car to witness five houses and multi-units in row that were abandoned. I looked towards the opposite side of the street and noticed numerous other vacant structures. As I continued, I again saw countless pieces of real estate that were without occupants.
Welcome back. I posted the first part of this article, "Take Steps to Avoid Foreclosure (Part 1)". I discussed my observations while driving through a neighborhood in Chicago. The things I saw are not unique to this area. Foreclosure is an epidemic that plagues neighborhoods across the country-- rich and poor, urban and rural.
I was watching the news this morning and heard the continued reports about the collapse of Lehman Brothers, Freddie Mac, Fannie Mae, and Bear Stearns. And within the past few days, the Federal government has agreed to give $85 BILLION to AIG, the world's largest insurer. If large companies like these feel the stresses of the economy, imagine what we are feeling.