What is foreclosure? It is the forced sale of any property of a debtor by court order to pay off a loan on which he or she has defaulted. In Indiana the laws that govern the foreclosure process can be found in the Indiana code Article 29, Chapter 7.
There are two types of foreclosure, judicial and non judicial; in Indiana non judicial foreclosures are not present. Indiana is seen to be a lien theory state; which means that the property can act as mortgage meaning, a security underlying a loan. The document which entails the evidence of the property being a lien is the mortgage. The mortgage consists of a number of things and documents namely a note and a security agreement. The security agreement is particularly a document which provides for the security on the loan or interest taken which is recorded in the note, in which the terms for repayment are also included.
The foreclosure procedure in Indiana starts as soon as the lender registers a complaint in the court. Under the Indiana law, the lender is not required to send a notice to the borrower, prior to registering the complaint in the court. The mortgage plays an immensely important part in the filing of this complaint. The period before the filing of complaint is known as the pre-foreclosure period and usually the complaint is filed three months after the execution of the mortgage date. However, for older mortgages, the period can be prolonged from six months to twelve months.
In Indiana, Foreclosure process has no waiting period in the case of abandoned properties. Upon the filing of the complaint a lis pendens is made, which basically is a formal written document notifying the public that the property is been foreclosed. Mean while during this process, the borrower can satisfy the debt or loan including all interest, upon which, the complaint then must be discharged or dismissed.
The complaint, along with all the documents is given to the sheriff who then appoints an auctioneer for the foreclosure sale. However, there are certain duties that the sheriff must perform before the sale. The notice of the auction must be advertised in a local newspaper, once every week for 21 days and these publications must begin 1 month prior to foreclosure sale. The sheriff is also required to place public notices in three different places and also the courthouse. After this, the sheriff must send a notice to the borrower regarding the foreclosure sale.
The auction must take place between 10 a.m. to 4 p.m. except on Sundays. The sheriff is required to immediately transfer the property to the name of the winning bidder. However, if the lender delays the time of the foreclosure sale, another sheriff must be appointed and the whole process including public notifications must be done all over again. Lastly, once the sale is complete, the borrower has no right over the property and also losses any kind of redemption rights.
Depending on the type of property and the mortgage, it approximately takes 150 to 200 days to complete the sale foreclosure process. This process may be entirely delayed in the borrower files against the complaint or files for bankruptcy i.e. the inability to pay back their creditors.