 Kentucky Loan Modification Guidelines
Judicial Foreclosure Available: Yes
Non-judicial Foreclosure Available: Effectively, no
Kentucky has a rigid rule on foreclosures: no out-of-court foreclosures
are valid other than voluntary sales by the borrower. A deed of trust sale,
a power of sale clause in a mortgage or sale by a trustee will not work
in Kentucky. The only forced foreclosure sale that is permitted is one
pursuant to a court order. Also, common law or strict foreclosure is forbidden
in Kentucky. The lender must be prepared to engage in litigation to foreclose
in the state of Kentucky. Often the lender can win by default or summary
judgment but, if not, the case is tried to a jury.
Possession
On the other hand, if the borrower abandons the home, the lender may obtain
possession of the property once the borrower goes into default. The lender
may operate the property for the benefit of the borrower. Any income produced
goes to the lender, not the borrower, but will be credited toward paying
off what the borrower owes. If the borrower does not abandon the home,
the lender may not take possession until the court confirms the foreclosure
sale.
Redemption and Appraisal
Prior to a foreclosure sale, the property must be appraised. If the actual
foreclosure sale price is less than two-thirds of the appraised value,
then for one year after the sale the borrower has the right to redeem the
property from the buyer for the buyer's purchase price plus ten percent
interest. Interestingly, the borrower's right to redeem may also be sold.
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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