There are two types of foreclosure: Judicial and Non-Judicial. As you can probably tell from the names, Judicial goes through the court system while Non-Judicial doesn’t. There are significant differences between the two and you don’t get to choose which is used…that decision was made when you signed your mortgage paperwork. You can find out whether your state uses Judicial or Non-Judicial foreclosures as well as other useful foreclosure laws in our article about state laws.
Judicial
All 50 states allow lenders to foreclose through the court system. Judicial Foreclosure is the only option for lenders in nearly half the states, however. From the homeowner’s point of view, a Judicial Foreclosure can be somewhat intimidating or scary because you can have to make appearances before the court handling your case. This can work in your favor, however, because the court will probably be more sympathetic to you than the lender. The court will never throw your case out simply because they like you, but having a third party involved will help make sure the lender doesn’t take advantage of you.
Judicial foreclosures typically take longer than Non-Judicial foreclosures. They can range from 6 months to 2 years and, in most cases, you can stay in your home throughout the process. You can also contest the foreclosure if you believe it is unfounded or the lender did not provide proper notification or follow state or federal laws. If you believe this is the case, I highly recommend you contact an attorney in your area that specializes in foreclosure law and discuss your situation before going to court.
Non-Judicial
Non-Judicial Foreclosures typically move much faster than Judicial Foreclosures because the courts aren’t involved. They can move as fast as 1 month to 1 year from notice of default to the foreclosure sale. Once you are sent a notice of default, the only way to delay or stop the process is to file a legal suit and seek an injunction against your lender’s action or to file bankruptcy. For basic information about the impact filing bankruptcy has on your foreclosure, check out this article. As in a Judicial foreclosure, you can usually stay in your home until after the foreclosure sale in a Non-Judicial.
Lenders Have Flexibility
Important! Regardless of the type of foreclosure procedure your lender uses, they have a lot of leeway in when they actually decide to begin the foreclosure process. You can find out more detail in our foreclosure timeline article, but just because you’re in default does not mean you’re in foreclosure.
You enter default simply by failing to make payments. Once you’re in default, it is completely up to your lender (or servicer) whether they begin the foreclosure process for you or not. This is why you must be proactive!
By contacting your servicer, letting them know your situation, and working together with them to solve your default, you can stay out of foreclosure. Being passive is not an option if you want to keep your home.
Whether you make these contacts and negotiate a workout yourself or choose to use a professional to do it for you, you must take action to save your home. If you don’t know whether you can or should try to do this yourself, answering the questions in our “Discover How to Decide” article will give you somewhere to start.
Connecticut and Vermont are Special…
Connecticut and Vermont permit what is known as a strict foreclosure. This is a type of Judicial Foreclosure, but it transfers the title of your home to the bank without a sale. If you live in one of these states and have equity in your home, it is even more critical you take control of the process and begin negotiating with your lender as soon as you know there’s going to be a problem.
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Tags: foreclosure timeline, judicial foreclosure, lender mediation, lender negotiation, lenders, loss mitigation, negotiation, non-judicial foreclosure
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