Well, I'm not an attorney but a I play one on TV.....hmmmm, sorry, that's not even close to being funny........ I meant to say ....
as a title agent, I review lots of foreclosure actions. I look at foreclosures in the chain to determine if they were done properly, all liens divested, etc., so I have a reasonable handle on what an attorney would look for in the title review. As ususal, comments from our attorney readers are most welcome.
First, the attorney must confirm that the mortgagors, the borrowers, are the vested owners. Right from the get go, sometimes the search will reveal that the mortgage is not a valid lien. If that happens, the mortgage lender will make a claim on the loan title policy. If the lien isn't valid, the attorney can't proceed to foreclosure.
We once had a transaction like that. I had a heart attack when I got the request from the title company for the file. My review showed that we had searched and mortgaged the correct property, however, my staff skipped one very critical step..that's when I had a big sinking feeling......our staff examiner neglected to check the legal description in the deed prepared by the seller's attorney. He checked everything else on that document. I could see his checkmarks on the scanned faxed copy, but there was no checkmark next to the lot number.
[Some folks get peeved when we ask for the proposed deed ahead of time. We require that an on-staff title agent do the review. Obviously, when I saw the oversight on this transaction, we had a "training opportunity" in the office.]
Thankfully, in this case, the seller owned both lots and was willing to sign a corrective deed which the title company promptly recorded, allowing the foreclosing attorney to proceed with the action.
OK, now moving on, if the mortgage is deemed valid, the foreclosing attorney is looking for other liens and encumbrances. The attorney must be certain that all parties who may have an interest are served good notice of the foreclosure action. If any one of the parties who may have an interest are not served, their interest will not be divested and that lien will stay with the property and survive the foreclosure.
Now, other than the occupants, and vested owners, who will the attorney want to serve? Well, let's start with any subordinate mortgages. Those lenders must be notified and given an opportunity to protect their interest.
We also have government agencies. If the owner of the property has any outstanding lien with the federal government, the USA must be listed as a defendant in the foreclosure suit.
In Pennsylvania, we have inheritance taxes to consider, so if the attorney finds an estate in the chain for which inheritance taxes may still be owing, the PA Department of Revenue must be notified.
Then, you have the types of liens that won't be divested by the foreclosure action. These typically include property taxes and municipal liens. The attorney must identify these liens as the lender must have a complete understanding of the equity or lack thereof in the real estate before moving forward.
There are many potential parties and issues that must be considered. These are just a few. That's why it's so very important that the attorney selected by the mortgage lender is one who specializes in foreclosure. Even the most knowledgable and careful attorney will make mistakes, but you reduce the number of mistakes by using an expert.
I hope that helps.