A foreclosure is generally a long and complicated process. Each state sets its own procedures for handling foreclosures, with some states opting to allow judicial foreclosures. As might be expected from the name a judicial foreclosure is handled within the state’s court system. When a homeowner fails to make their monthly mortgage payments in a timely manner for a series of months the lender has the right to file a complaint.
The process of filing a lender complaint includes the filing of a notice of Lis Pendens. Like many legal terms Lis Pendens is taken from Latin. In English it translates to “suit pending.” Filing of this notice secures the interest of the lender and puts other potential parties on alert that a lawsuit has been filed in a dispute over a piece of real estate property.
The complaint that is filed by the lender in a judicial foreclosure typically must state how much the debt is and why the default on the loan should enable the lender to assert a foreclosure. After the complaint is filed the homeowner will be notified of the filing and will be provided with an adequate opportunity to be heard in a court of law. In the event that the court finds the debt to be valid and that it is currently in default, then the judge will find judgment in favor of the plaintiff and the defendant will be responsible for the total amount owed including the costs of the judicial foreclosure process.
At this time a writ will be issued. The writ authorizes a sheriff’s sale of the real estate in question. This sale is actually an auction that occurs in a public place and which any member of the public may attend. Occasionally such auctions are held on the courthouse steps, but most often they take place in front of the property that is being auctioned. Regulations vary from state to state. However, most sheriffs’ sales require cash payment up front at the time of the auction. Some may allow a sizable deposit with the balance being due within 30 days.
The auction concludes with a winning bidder and then the court must confirm the sale. The sheriff’s office prepares a deed to the property that is subsequently delivered to the winning bidder. Once the bidder has recorded the deed they are the legal owner of the property.
The process for a judicial foreclosure is a long one. It can take months and even a year or two from the beginning to the end of the process. The court system in the United States is overburdened in general, so if you find yourself in a position where you may be facing a judicial foreclosure, it is important to try to avoid the situation.
Defaulting on a mortgage and facing foreclosure can be an extraordinarily stressful and distracting time, but try to remember that no lender actually wants to foreclose. Foreclosing almost always means a loss of income to the lender, so they would rather rectify the situation and keep the current owner in the home. Consequently, if you find that you are in danger of defaulting on your mortgage, then your lender may put you in contact with their loss mitigation department. This department may be able to make adjustments to your loan that enables you to keep your property. It is critical to keep the lines of communication open with your lender at this difficult time, but it is also important to keep in mind that you may need to seek legal counsel as well to adequately protect your rights.