Kentucky Foreclosure Law
In Kentucky, foreclosure proceedings has to go through the litigation process for the state frowns on out of court foreclosures, a deed of trust sale, a power of sale clause in a mortgage or sale by a trustee and common law or strict foreclosures. The only valid foreclosure is the voluntary sales by the borrower. The right of redemption is allowed while deficiency judgment although permitted is subject to restrictions.
Possession
The only way that the lender could automatically secure or take possession of the property in question is if the owner deserted the home once it goes into default. The lender may subject the property for profit for his benefit but the income derived from it would tantamount to a reduction of the borrower’s loan on the property. If the borrower does not abandon the home, the lender may not take possession until the court confirms the foreclosure sale.
Redemption and Appraisal
The borrower has the right to redeem the property within one (1) year from the foreclose date if the appraised value before the foreclosure sale is less than two-thirds. The redemption value of the property is the buyer’s purchase price plus ten percent interest. It is interesting to note that the borrower’s right to redeem may be bought.
The complaint initiating a foreclosure action must be filed in a circuit court where the property is located. There is a filing of lis pendens. The notice of action is filed, and is sent to the defendant who obviously has an opportunity of respond, 21 days to be exact from the date of service. If no response, the plaintiff can move for a default judgment. A motion is then made for judgment. The judgment may be default judgment, summary judgment, or agreed judgment. Entry of judgment occurs, followed by advertising of sale.
Foreclosure Notice of Sale
The sale should be advertise once a week for three (3) straight weeks in a newspaper and must state the sum of money for which the sale is to be made. The property is sold on the courthouse steps.
Deficiency Judgment
In Kentucky, it is possible to obtain a deficiency judgment against the borrower for the difference between the amount the borrower owed on the old loan and the foreclosure sale price, but only if the borrower was personally served with the lawsuit, or failed to answer.
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