When the applicable state's laws do not require judicial foreclosure or the joinder of junior lienholders, the rules are less clear.
STARFIELD AND SMITH FREE
agrees to extinguish its lien before the one year period expires so the property can be sold free and clear. In such cases, the United States has an interest in the property that has the potential to be a cloud on title, preventing the further sale of the property unless the U.S. In cases where the government is so joined, the Federal statute requires the sale of the property to be a judicial sale, and for a period of one year from the foreclosure sale, the right of redemption will exist. The Federal statute that creates the right of redemption specifically allows the United States to be named a party in any civil action to foreclose a mortgage or other lien upon real property on which the United State has a mortgage or other lien. Some states' laws require all junior lienholders to be joined in a foreclosure action in order to terminate junior liens.
What is the scope of this right of redemption? What happens in states where judicial foreclosure is not the norm? In large part, the answer turns on the interpretation of whether the federal statute requires the joinder of junior lienholders in the foreclosure action, or merely allows the United States to be joined as a party. §2410, the United States may have a right of redemption-a right to purchase the property for an amount determined by a formula set forth in the statute-that lasts for one year from the date of the foreclosure sale. If the government's mortgage is junior to the lien of the mortgage that is being foreclosed, pursuant to 28 U.S.C. What rights does that give to the United States? The proposed buyer obtains a title search, and it shows an exception for a junior mortgage or a right of redemption in favor of the United States (or one of its agencies, such as the Small Business Administration). You are foreclosing on a mortgage and you've entered into a contract to sell the property to a third party. David frequently travels to Washington, DC in his capacity as a NAGGL Board Member and as a small business owner, to assist the Agency and Congress in developing policies and proposals to advance the interests of SBA lenders and improve the delivery of financial assistance to small businesses. Small Business Administration assisting with the re-write of the SOP 50-10, and is currently devoting time to assisting the Agency with the revisions to the SOP 50-51. Additionally, David serves on NAGGL's Board of Directors, as one of two non-lender members of the Board, and has been honored for his contributions to the industry by being named NAGGL's Instructor of the Year and being asked to serve on NAGGL's Executive Committee.ĭavid was very involved working directly with the U.S. In addition to his law practice, David devotes countless hours to the National Association of Government Guaranteed Lenders ("NAGGL") as a developer and instructor for several of NAGGL's most popular courses, as a member of NAGGL's Technical Issues Committee, as a regular contributor of articles and insights to NAGGL's monthly newsletter, as a member of the District III Liaison Committee and as a frequent lecturer and moderator of roundtable discussions on the latest SBA lending and regulatory issues. David uses these skills on a daily basis to represent the interests of small businesses and the lenders that extend capital to the small business community. His peers have repeatedly voted him a "Super Lawyer" in Philadelphia magazine. Martindale-Hubbell gives David its highest rating of "AV" for his legal skill and ethics. David's skill as an attorney is of the highest caliber. In his practice, David represents and assists numerous small businesses and hundreds of lenders that participate in SBA's lending programs. David has been actively involved in SBA lending and has been helping lenders to document, close, service and liquidate SBA loans for over 20 years. David is the co-founder and Managing Partner of Starfield & Smith, P.C., a law firm specializing in SBA and government guaranteed commercial lending, SBA regulatory issues and general business consulting.
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