The Foreclosure Process

There are two types of Foreclosure processes: 

1. Non-Judicial

2. Judicial 

These two types of Foreclosure vary by state. 

Foreclosures are usually non-judicial in the following states: Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia (sometimes), Georgia, Idaho, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico (sometimes), North Carolina, Oklahoma (unless the homeowner requests a judicial foreclosure), Oregon, Rhode Island, South Dakota (unless the homeowner requests a judicial foreclosure), Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and Wyoming. 

Foreclosures are generally judicial in the following states: Connecticut, Delaware, District of Columbia (sometimes), Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana (executory proceeding), Maine, Nebraska (sometimes), New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma (if the homeowner requests it), Pennsylvania, South Carolina, South Dakota (if the homeowner requests it), Vermont, and Wisconsin. 

While this page explains in somewhat great depth how each of these processes work, understanding and navigating the foreclosure process in order to stop the foreclosure often takes professional assistance.

When someone obtains a mortgage on a property, there are typically at least two documents executed, known as a "Deed of Trust" and a "Note". Basically these documents specify the borrower's obligation to repay that mortgage and also give the lender the ability to "foreclose" on the property should the borrower default on their payment obligations.

The terms of a typical "Note" indicate the monthly payment is due on the 1st of the month, with a grace period until the 15th of the month. If a payment is not made after the 15th, late fees are charged and the payment is considered delinquent or in default. If the payment is still not made by the 30th of the month, the lender will report to the credit bureaus that there is a 30 day late.  

If still no payment is made after approximately 120 days, the lender typically sends a letter called “intent to foreclose”. If there is still no response or payment from the borrower, the lender will contact a local foreclosure attorney, to begin their legal right to foreclose. This foreclosure attorney is now known as the Trustee for the lender. Of course, all legal fees charged by the Trustee are added to what is owed by the borrower.   The Trustee will very soon file a “Notice of Default” at the county recorders office, and also publishes the notice in the local newspaper. Now the borrower’s situation is public record. Anyone who wants to know about the borrower’s significantly late payment(s), can do it without much effort. At this same time, the borrower is served a notice of default by certified mail.    Now the foreclosure process has started, and the timeline generally goes as follows:   

• 90 to 120 Days Late – Notice of  Default is file and Foreclosure process begins. A 90 day redemption period begins at Notice of Default, wherein borrower may bring the loan current by simply making up the arrearages (back payments), late charges, and legal fees. 
• End of 90 Day Redemption Period –  Trustee files a “Notice of Trustee’s Sale”, which indicates time and date of when property will be sold at public auction. This notice is sent by certified mail to borrower, and a copy of the notice is attached to the front of the property. Trustee also typically advertises the notice in the local newspaper. The date of the auction is typically about 28 days after the notice is filed.
• 120 Days (approx.) after Notice of Default is filed – A foreclosure sale is set. At the foreclosure sale, if a third party makes the highest bid on the home, that person or entity will then become the new owner of the property. In many cases, the foreclosing party will be the high bidder. At the foreclosure sale, the foreclosing party typically bids on the property using a "credit bid." A credit bid means that the bank bids the debt that the borrower owes. Basically, the lender gets a credit in the amount of the borrower's debt.

The foreclosure is now complete, the lender reports this to the credit bureaus, and the borrower’s credit rating is severely damaged. 

What has been described is only a basic overview of the Non-Judicial foreclosure process. It is extremely important that you understand how this process effects your individual situation. Please give us a call so we can discuss it. Please also view the "Knowing Your Options" page.

Judicial foreclosures usually take longer than Non-judicial foreclosures, generally lasting several months to even a year or longer as it involves the court systems.  

When someone obtains a mortgage on a property, there are typically at least two documents executed, known as a "Deed of Trust" and a "Note". Basically these documents specify the borrower's obligation to repay that mortgage and also give the lender the ability to "foreclose" on the property should the borrower default on their payment obligations.

The terms of a typical "Note" indicate the monthly payment is due on the 1st of the month, with a grace period until the 15th of the month. If a payment is not made after the 15th, late fees are charged and the payment is considered delinquent or in default. If the payment is still not made by the 30th of the month, the lender will report to the credit bureaus that there is a 30 day late.  

If still no payment is made after approximately 120 days, the lender typically sends a letter called “breach letter”. If there is still no response or payment from the borrower, the lender will contact a local foreclosure attorney, to begin their legal right to foreclose. This foreclosure attorney is now known as the Trustee for the lender. Of course, all legal fees charged by the Trustee are added to what is owed by the borrower.   The Trustee will very soon file a “Notice of Default” at the county recorders office, and also publishes the notice in the local newspaper. Now the borrower’s situation is public record. Anyone who wants to know about the borrower’s significantly late payment(s), can do it without much effort. At this same time, the borrower is served a notice of default by certified mail.    Now the foreclosure process has started, and the timeline generally goes as follows:   

• 120 Days Late – Notice of  Default or Breach Letter is filed and Foreclosure process begins. In most cases 30 days are allowed to cure the default & bring the mortgage current. 
• 150 Days Late -  The Lender/foreclosing party files a lawsuit with what is commonly called a "petition for foreclosure" which sets out the reasons for a foreclosure judgment to be filed.  The borrower is notified about their rights and the borrower is usually provided with 30 days to respond.  If the borrower doesn't respond to the lawsuit, a default judgment is filed authorizing the sale of the property. If this occurs, the borrower automatically loses the case. If the borrower does respond within the allowed time period, foreclosure judgment cannot be filed.  Instead, a "motion of summary judgment" if filed (where the court grants judgment in favor of the lender/foreclosing party if there's no dispute as to the important facts of the case). Ultimately, the end result is typically the same and foreclosure is eminent.
• 180 Days + often much longer -  After the court issues a judgment, a foreclosure sale is set. At the foreclosure sale, if a third party makes the highest bid on the home, that person or entity will then become the new owner of the property. In many cases, the foreclosing party will be the high bidder. At the foreclosure sale, the foreclosing party typically bids on the property using a "credit bid." A credit bid means that the bank bids the debt that the borrower owes. Basically, the lender gets a credit in the amount of the borrower's debt. 

The foreclosure is now complete, the lender reports this to the credit bureaus, and the borrower’s credit rating is severely damaged. 

What has been described is only a basic overview of the Judicial foreclosure process. It is extremely important that you understand how this process effects your individual situation. 

Please contact us a call so we can discuss it. Please also view the "Knowing Your Options" page.