David recently moved to Kentucky from California, where he worked as a real estate agent. He is advising a client who is worried about losing their home to foreclosure. David tells the client that the lender can use the power-of-sale clause in the security instrument to quickly foreclose without going to court. Is David's advice correct under Kentucky law?
Correct Answer
C) No, because Kentucky requires all mortgage foreclosures to proceed through the judicial process, regardless of any clause in the mortgage
David's advice is incorrect. Kentucky is a strictly judicial foreclosure state under KRS Chapter 426. All mortgage foreclosures must proceed through the court system, regardless of any power-of-sale language that might appear in a mortgage document. There is no non-judicial foreclosure option in Kentucky. David is applying California law (which allows non-judicial foreclosure via deed of trust) to a Kentucky situation.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A conventional loan is a mortgage that is not insured or guaranteed by a government agency such as the FHA, VA, or USDA. It is originated and funded by private lenders and may be conforming or non-conforming.
The debt-to-income ratio (DTI) compares a borrower's monthly debt obligations to their gross monthly income. It is used by lenders to determine how much mortgage a borrower can afford.
In the context of foreclosure, a deed transfers ownership of the foreclosed property to the new owner, typically the buyer at a foreclosure sale.
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