Facing Foreclosure? Here's Why the Georgia Foreclosure Process is So Fast. (#6 in a Series)

Many of the comments posted on the last installment of this series expressed amazement concerning the lightening speed of some Georgia home foreclosures. Here are the main reasons:

A Crash Course in Title Theory.

Georgia is what's known as a Title Theory state, where the property title remains in the hands of the lender until the underlying loan is paid in full. When a person buys real estate in Georgia with funds borrowed from a lending organization or party, the resulting mortgage is established by two legal instruments: a promissory note or "promise to pay", and some type of title security document.

The first of the two mortgage instruments is the note, which is considered to be a negotiable instrument that can be transferred to another person or agency to collect. In fact, mortgages often change hands more than once during the course of the loan.

The second is the security instrument. The document that secures the title in Georgia is called a Deed to Secure Debtbut may also be referred to as a Security Deed. When you entered into such an agreement, you, the borrower, became the mortgagor, or person incurring debt in order to purchase real estate, and your lender became your mortgagee, the credit-extending agency. The mortgage creates a lien on the property in favor of the lender. In Georgia this usually takes the form of a security deed conveying title over the property to the lender, though the borrower retains all the usual rights of ownership as long as the repayment terms are being met.

What are Acceleration and Power of Sale?

Acceleration is a clause written into the mortgage which allows the mortgage-holder the right to declare the entire debt due and payable anytime a borrower defaults on their agreed payment schedule. Virtually all mortgages today have acceleration clauses. But Georgia mortgages usually go a step further. The security deed also contains a "power of sale" provision, which authorizes the lender to sell the property with no judicial process required in case of default.

What this all means for Georgia home buyers is that the lender keeps the title to the property until the terms of the lending agreement have been entirely fulfilled. Then the lender must clear title by canceling the security deed upon full payment of the debt. But, if the borrower does not adhere to the terms of repayment, the lender may foreclose on the property.

To learn more about the process and the options, or to pick up a copy of my free eBook on the subject, visit http://AvoidGeorgiaForeclosure.com