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Foreclosure |
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Foreclosure |
Foreclosure is the proceeding where a lender seeks full payment for a loan by selling, at public aution, the security for the loan. The type of proceeding used by the lender will vary from state to state, and may also vary depending on the individual circumstances of the loan and borrower. Most foreclosure actions begin due to a default in payments by the borrower, although the lender may also initiate foreclosure due to the non-payment of a balloon payment, transfer of the property or any other violation of the original note.
Judicial foreclosures are done through the courts with a Lis Pendens, or notice of pending legal action, being the first step in the process. The lender will need to prove their right to foreclose, followed by a foreclosure judgment, and a scheduled public auction. The timeframe to complete a judicial foreclosure can vary from a few months up to 10 months or more if the foreclosure is contested.
Non-Judicial foreclosures are processed outside of the courts, often requiring notices to be mailed and recorded in the county where the property is located, publication of notices in a newspaper of general circulation in the county where the property is located and will end with a scheduled public auction. Non-judicial foreclosures are usually a faster process, with the public auction coming in as little as two months from the time of the first notice mailing.
Post-foreclosure redemption, allowing the homeowner to re-purchase the property is more common in judicial foreclosure actions, and fairly uncommon in non-judicial actions. Lender workouts, where the lender seeks to keep the homeowner in the property by altering terms of the loan, or setting up a repayment schedule are available, on a case by case basis, to prevent either type of foreclosure.
