Did you know that each states handles foreclosures differently? In fact, there are some very important differences in how the foreclosure process is managed between states, which can significantly impact your home and future. Getting to know how states vary in terms of foreclosure can help you better prepare in the event of a financial hardship that threatens your home.
A judicial foreclosure state is one that processes foreclosures through the court system. The process begins when the lender files a complaint against the borrower stating the debt that is owed and why the mortgage default should be pursued through foreclosure. If the court validates the lender’s compliant, they will issue a judgment order for the total amount owed. The court order may also include foreclosure fees and court processing fees, which the borrower will be held responsible for paying.
The judge will then authorize a sheriff’s sale of the home where the property can be sold in an auction. Although the borrower is served with a notice of the lender’s complaint, and then the court’s order, this often happens fairly quickly. The nature of the court system speeds up the foreclosure process, which can leave a homeowner very little time to stop the foreclosure process.
A non-judicial foreclosure state is one that processes foreclosures without the help of the court system. Foreclosures are handled directly between the borrower and lender, outside of the court system. The process begins when the lender mails a letter of default to the borrower, indicating their mortgage is past due. Generally, the homeowner has more time to stop the foreclosure in a non-judicial foreclosure state. Once a borrower receives the default notice they are granted around 30 days to cure the default before the lender takes further action.
If the borrower does not resolve the default the lender will issue a Notice of Sale. This notice is sent to the borrower as well as made matter of public record. Again, the borrower has some time to intervene to stop the foreclosure process before the home is sold at auction. However, if the borrower does not resolve the mortgage debt within a specified time period the home is legally eligible to be sold at auction. Each state varies on the length of time allowed between the Notice of Sale and the selling of the home at auction.