Judicial vs. Non-Judicial Foreclosure

Each state in the U.S. handles it’s real estate foreclosures differently. You need to understand those differences and know your specific state’s procedures. You may hear the terms judicial foreclosure and non-judicial foreclosure. Just what do these terms mean?

Judicial foreclosure
Judicial foreclosures are processed through the courts and begins when the lender files a complaint and records a notice of Lis Pendens (lawsuit pending). The lender will state what the debt is and why the default should allow the lender to foreclose and take the property. The homeowner will be served with a notice of the complaint and will have the opportunity to be heard before the court. If the court finds the debt in default, it will issue a judgment for the total amount owed, including the costs of the foreclosure process.

Non-judicial foreclosure
Non-judicial foreclosures are processed without court intervention, with the requirements for the foreclosure established by state statutes. When a loan default occurs, the homeowner will be mailed a default letter and a Notice of Default will be recorded. If the homeowner does not bring the payments up to date, and any associated fees, a Notice of Sale will be mailed to the homeowner, posted publicly, recorded at the county recorder’s office, and published in local legal publications. After the legally required time period has expired, a public auction will be held. Auctions of non-judicial foreclosures will generally require cash, or cash equivalent, either at the sale or very shortly after. Some states start this process directly with the Notice of Sale.

If you are entering into the real estate marketing focusing on foreclosures and short sales, you must know the specific laws of your state.

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