|Judicial||Non Judicial||Comment||Process Period||Publish Sale||Redemption Period||Sale/NTS|
|•||•||Judicial rarely||37 days||32 days||None||Trustee|
A court foreclosure occurs when there are title problems or the mortgage or trust deed lacks a clause permitting an out-of-court proceeding. The process begins when a lender files a petition describing the situation, the property, and the default amount. The borrower then receives a 30-day written notice in which the default must be paid to the court. If the default is not resolved, a foreclosure sale is scheduled.
The out-of-court process is more common, as most mortgages and trust deeds contain a clause giving a lender the power to sell the property outside of the court system. The lender starts the foreclosure process by scheduling a foreclosure sale. Georgia does not require lenders to warn the borrower before starting the foreclosure process, although the mortgage or deed of trust might demand this.
If the mortgage or deed of trust allows, the borrower can stop the foreclosure by paying off the default amount plus applicable costs, but Georgia state law does not automatically give this reinstatement right to the borrower. The borrower can always stop the foreclosure by paying the total loan balance.
A notice of sale is published once a week for the four weeks before the sale. The notice is also sent to the borrower a minimum of 30 days before the sale date. The notice must include the date, time, and location of the sale; a description of the property; mortgage information; and the lender and borrower names.
The foreclosure sale is at the county courthouse on the first Tuesday of the month between 10:00 a.m. and 4:00 p.m. The winning bidder, if other than the lender, is required to pay the full bid amount to the person conducting the sale immediately following the sale. If a foreclosure sale is cancelled, the foreclosure process starts over again.
After court-ordered foreclosure sales, a confirmation hearing is scheduled and the borrower is notified within five days of the hearing. If the sale price of the property is at least market value of the property, the court confirms the sale. If not, the court may order a new sale.
There is no right of redemption for the borrower following a foreclosure sale in Georgia.
On July 12, 2012, the Georgia Court of Appeals, by a 4-3 majority, ruled in the case Reese v. Provident Funding Associates that notices of foreclosure must include the true identity of the “secured creditor.” The Court of Appeals defined “secured creditor” to mean the “owner of the loan,” not the servicer. This constitutes a new foreclosure requirement under Georgia law that will significantly impact the ability of creditors to enforce their liens, and it has the potential to invalidate foreclosures that do not meet this requirement.
Lenders seeking to foreclose on a home must provide better disclosure on who owns the mortgage and list the contact information for people who can negotiate with borrowers under the 2012 Georgia Court of Appeals ruling.
However, the Supreme Court of Georgia on May 20, 2013, vacated the decision of the Court of Appeals in Reese v. Provident Funding Associates. In You v. JP Morgan Chase Bank, the U.S. District Court for the Northern District of Georgia acknowledged that there was a split of authority in Georgia as to whether the holder of a security deed who did not also hold the note could institute non-judicial foreclosure proceedings. This case effectively overturned Reese in its entirety.
In You, the Court held that the foreclosing party did not need to own or have possession of the note along with the security deed. The security deed was sufficient to foreclose. Additionally, the Court went one step further and held that the required 30-day notice did not need to identify the secured creditor. It only needed to include identification information of a party that had authority to negotiate on behalf of a lender.
The ruling in You effectively dismantled the technical requirement that Reese set forth. To lenders this ruling gives certainty and will reduce litigation. As to borrowers, consumer advocates will argue that this ruling leaves the foreclosure process, especially who owns the loan, unchecked.