As if the foreclosure process wasn’t scary enough, there are big differences between how they are handled between states. These differences have the potential to restrict homeowner options for resolving their debts, as well as impact their chances of successfully avoiding a foreclosure.
There are two types of foreclosure proceedings, each of which bring important differences for homeowners. In a judicial foreclosure state, the process is handled in the court system . This means that lenders must file a lawsuit against the homeowner in order to obtain a court order to initiate the foreclosure process. The entire process is supervised by the court, which can take several months to complete. Homeowners who live in a judicial foreclosure state generally have more time to resolve their debts and/or develop a plan to halt the foreclosure proceedings, such as a mortgage modification or short sale.
In a non-judicial foreclosure state, there is no lawsuit filed and the foreclosure process is handled outside of the court. This means that there is no court supervision of the process, which can lead to a much faster completion of the foreclosure process. It is important to note that a judicial foreclosure is available in every state. However, if a power of sale clause is included in the mortgage or if a deed of trust clause was used, instead of an actual mortgage a non-judicial foreclosure is allowed. Homeowners who live in non-judicial foreclosure states have far less time, 30 days or less in some cases, to resolve their mortgage debts.