What Are the Types of Foreclosure?

Find out the differences between judicial and non-judicial foreclosure.

In the United States, each state has its own foreclosure process. It varies depending on whether they are a mortgage or deed-of trust state. You can assume that all states allow some type of judicial foreclosure process.

We have highlighted some key points about each type of foreclosure below. This is not a complete list and does not include all the processes.

Judicial foreclosure

  • The lender seeks to foreclose the borrower by filing a civil suit against him and serving him with a formal summons as well as a foreclosure complaint.
  • The local court system handles the foreclosure process. The court appoints an agent to conduct the foreclosure auction at the courthouse steps.
  • The lender files a lis pendens at the county clerk where the property’s location. This lis pendens is recorded with the county clerk where the property is located. It becomes a lien on that property and notifies of the pending foreclosure sale.
  • The court grants permission to the lender to conduct the foreclosure sale.
  • The Notice Of Foreclosure Sale (NFS) is published and sometimes posted, depending on the location, for a period of time before the auction.
  • The borrower can stop foreclosure by paying the amount owed up to the date of sale.
  • If no legal objections are raised, the process can take anywhere from four to eight to complete.

Nonjudicial foreclosure

  • This is done in deeds of trust states. A deed in trust transfers an interest in real property to a trustee to be used as security for the repayment of a debt.
  • The trustee is authorized to initiate foreclosure proceedings based on a power-of-sale clause in the mortgage or trust deed.
  • The trustee files a Notice of Default with the county clerk in the area where the property is located. This document informs the borrower of imminent foreclosure and gives him a window of opportunity to object to the lender’s claim.
  • The borrower cannot stop foreclosures after the expiration date.
  • After a predetermined time period (which varies from one state to the next), the trustee files a Notice of Trustee’s Sale (NTS), with the county clerk. This notice identifies the date, time, and location of the foreclosure auction.
  • A foreclosure can take 12 several months, depending on the state.

It is important to remember that both judicial and non-judicial foreclosures are not the same. Each state has its own foreclosure laws and procedures. To protect your rights during a foreclosed property, consult a professional in your state.

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