Judicial Foreclosure Timeline

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 What is a Foreclosure?

A foreclosure is a legal process by which a lender, often a bank, takes possession of a home when a homeowner has failed to make mortgage payments. The loss of a home due to foreclosure can be devastating for a family. In addition to losing what is often their biggest asset, families are uprooted from their community and may find themselves with no place to go.
Foreclosures occur after a homeowner cannot make their monthly mortgage payments for several months (the number of months required is outlined in the mortgage documentation) and the lender evicts them from the home. When an individual purchases a home and obtains mortgage financing, they sign a contract stating that the home serves as collateral for the loan and may be repossessed if the owner does not make payments as required.

After the specified number of missed payments, the lender can seize or take the home from the homeowner. The lender will then sell the home to recover the debt owed for the mortgage.

There are two different types of foreclosures: non-judicial foreclosures and judicial foreclosures. A non-judicial foreclosure, also known as a foreclosure by power of sale, does not require court intervention. The lender, usually a bank, can sell the mortgaged property directly to recover the money owed. This is only available in more than half of the U.S. states (28).

On the other hand, a judicial foreclosure requires court intervention to sell the mortgaged property. In contrast to a non-judicial foreclosure, a judicial foreclosure is available in every state.

No matter which type of foreclosure process is used, the house belongs to the bank once the foreclosure is complete. There are, however, certain exceptions that may permit a homeowner to reclaim their home. These laws vary by state; thus, the opportunity to take advantage of them depends on where you live. An attorney can advise you whether this is available in your state.

What is the Lender Forbidden To Do in a Foreclosure?

The foreclosure process is quite complicated and may overwhelm homeowners struggling with adjusting to the fact that they are losing their homes. It is important for people to be aware of their rights and what mortgage lenders are and are not permitted to do. An attorney is an invaluable asset in figuring this out.

Sometimes, a mortgage lender may overstep their rights during a foreclosure. The laws regarding what a mortgage lender may do vary by state. However, in general, a mortgage lender cannot engage in the following before foreclosing on a home:

  • The lender cannot begin the foreclosure process if the homeowner applies for some help or a loan modification
  • If the borrower makes up the missing payments before the sheriff’s sale of the property, the bank cannot continue the foreclosure process
  • The lender must obtain a court order and file for an eviction before foreclosing the home
  • A mortgage lender cannot engage in “dual tracking.” In some states, the lender must determine whether or not the homeowner qualifies for either a loan modification or some other form of help before foreclosing on the home. The lender is not permitted to do both at the same time
  • The lender is not permitted to padlock the individual’s home if they are still living in it

However, there are some actions the lender is permitted to take during the foreclosure process, including:

  • Asking the court for a judicial foreclosure or beginning a non-judicial foreclosure
  • Seeking an alternative judgment if the lender is unable to sell the home at auction for what is owed on the mortgage

What are the State Laws Governing Foreclosure?

Several steps must be taken before the lender takes possession of the property through foreclosure. Each state has its own rules and regulations regarding the foreclosure process. If you find yourself in a foreclosure situation, you must hire a lawyer from your local area.

In 22 states of the United States, a judicial foreclosure is the only way to foreclose a home. In a judicial foreclosure, the lender must show the court that the borrower fails to make monthly mortgage payments.

If the court approves the foreclosure, the local sheriff will hold an auction on behalf of the bank and will sell the property to the highest bidder. This is done so the bank can recoup some of what is owed because of the missed mortgage payments.

Sometimes, the lender becomes the owner and resells the property directly without using the sheriff.

What is the Judicial Foreclosure Timeline?

As noted above, a judicial foreclosure is a foreclosure ordered by a court. Although foreclosures vary from state to state, the general process is discussed below.

  1. If the borrower misses one monthly payment, they can pay and continue the mortgage. The loan officer might call to remind them to make the payment. Late fees may apply.
  2. If there is a second missed monthly payment, the loan officer will likely call to pressure the homeowner and request that a payment be made over the phone. Again, late fees will likely apply.
  3. Suppose the homeowner misses a third monthly payment. The bank will send a notice of breach of the mortgage contract. The breach letter will state that the bank will exercise its accelerated clause, meaning the remainder of the mortgage must be paid within (usually) 30 days.
  4. If the borrower cannot repay the loan, the lender will begin foreclosure proceedings by having their attorney file a lawsuit. The borrower will have approximately 20 to 30 days to object by a formal written response.
  5. If the borrower does not object to the foreclosure proceedings, the court will enter an automatic default judgment against them. If the borrower does object, they may have several procedural and substantive defenses available.
  6. If the court does not enter a default judgment against the borrower, foreclosure proceedings continue. The court will schedule a foreclosure auction. At this auction, the highest bidder on the home will become the new owner.
  7. Depending on the property’s location, the borrower may have a right of redemption. If this is available, they will have a period following the auction to purchase the property back from the highest bidder.
  8. If the borrower cannot exercise their right of redemption, they will be evicted from the property. The borrower will have a certain number of days to vacate the property, and if they do not, they will be removed by law enforcement.

Do I Need a Lawyer for a Foreclosure?

Yes. If you are facing foreclosure, it is essential to have the help of an experienced foreclosure lawyer. It is important to hire an attorney as early as possible. In some cases, an attorney may be able to help you negotiate with the lender to avoid foreclosure.

An attorney will review your case, defend you against foreclosure, and utilize whatever methods are available in your state to prevent it. A lawyer helping with your foreclosure case may be the difference between keeping and losing your home.

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