Simple Definition – A mortgage foreclosure sale initiated by the lender when a borrower defaults on their mortgage. Such sales are overseen by the court.
Legal Definition – The Trustee or Substitute Trustee is the authorized individual, acting as an agent of the court, who oversees the sale process and makes certain the property is sold in a fair and equitable manner. Trustees and Substitute Trustees are basically identical in their capacity to coordinate the foreclosure sale process. Certain states, such as Maryland, are “Deed of Trust” states where the original mortgage document identifies a specific banker as Trustee. Hence, if the bank moves to foreclose, they name a “Substitute Trustee” to handle the process. Other states are “Mortgage States” that don’t name a specific banker as original Trustee and therefore would simply name a “Trustee” to handle the process.
Ownership – The debtor (owner) technically still owns the property – even after the auction sale takes place – until the court ratifies the sale and the property goes to settlement. Only then does the high bidder take possession / ownership of the property.
Unique Process Involved – A property cannot be sold at foreclosure without plenty of warning to the debtor. The debtor is sent a series of notices providing opportunities to get current with their payments. If the debtor fails to get current or work out a deal with the bank, the foreclosure sale can move forward. Even then, “Legal Advertisements” announcing the sale must be published for three consecutive weeks (for Maryland foreclosures) prior to the actual auction date. After the auction sale, court ratification of the sale may take anywhere between 30 days and 120 days depending on the jurisdiction.
In most instances, neither Atlantic nor prospective bidders have an opportunity to view / inspect the property.
Important to Keep in Mind – These sales represent the vast majority of sales conducted by Atlantic Auctions. Other sale descriptions include Assignee’s Sale. Another form of sale overseen by the court is a “Partition’s Sale” where a public auction is used to partition a property between joint tenants who cannot agree as to how the property should be divided.