Each state in the U.S. handles it's real estate foreclosures differently, it's important to understand those differences and know your specific state's procedures. The terms used and timeframes vary greatly from state to state, but the following information provides a general overview of the different processes and considerations.
Judicial Foreclosures
Judicial foreclosures are processed through the courts, beginning with the lender filing a complaint and recording a notice of Lis Pendens. The complaint will state what the debt is, and why the default should allow the lender to foreclose and take the property given as security. The homeowner will be served notice of the complaint, either by mailing, direct service, or publication of the notice, and will have the opportunity to be heard before the court. If the court finds the debt valid, and in default, it will issue a judgment for the total amount owed, including the costs of the foreclosure process. After the judgment has been entered, a writ will be issued by the court authorizing a sheriff's sale. The sheriff's sale is an auction, open to anyone, and is held in a public place, which can range from in front of the courthouse steps, to in front of the property being auctioned. Sheriff's sales will require either cash to be paid at the time of sale, or a substantial deposit, with the balance paid from later that same day up to 30 days after the sale. Check your local procedures carefully. At the end of the auction, the highest bidder will be the owner of the property, subject to the court's confirmation of the sale. After the court has confirmed the sale, a sheriff's deed will be prepared and delivered to the highest bidder, when that deed is recorded, the highest bidder is the owner of the property.
Non-Judicial Foreclosures
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 in many states, a Notice of Default will be recorded at approximately the same time. If the homeowner does not cure the default, a Notice of Sale will be mailed to the homeowner, posted in public places, recorded at the county recorder's office, and published in area legal publications. After the legally required time period has expired, a public auction will be held, with the highest bidder becoming the owner of the property, subject to their receipt and recordation of the deed. Auctions of non-judicial foreclosures will generally require cash, or cash equivalent either at the sale, or very shortly thereafter.
It is important to note that each non-judicial foreclosure state has different procedures. Some do not require a Notice of Default, but start with a Notice of Sale. Others require only the publication of the Notice of Sale to announce the sale, with no direct owner notification required. You need to know the specific procedure for your state.
Eric,
These differences are important, in my state, California, almost all of the foreclosures are non-judicial.
Take care!
RJH
That is very informative. Although it doesn't effect all states, in the states it does, you need to be aware
Eric
Thanks for the great information, but not a big surprise here. There will be a number of banks the will go out of business. What we are see like the RTC taking over saving and loan issues of the late nineteen eighties - early nineties. We will through it.
Good Luck
Lou
Great information! Hopefully, we won't have to use this information as much as the media would like to make us think. Luckily, our area has escaped the foreclosure meltdown. Maybe I'm speaking too soon, but I really don't think it is as bad as expected. I have only handled two short sales in the past two years. Can only speak for my business though.
Keep educating us Rainers. Thanks!
Celina Gleason, Realtor - AgentOwned Realty, Manning, SC
I remember the banker telling me that most of the foreclosure sales are non-judicial so one had better have title insurance researched before bidding at the court house for a property. He was implying that the property may be bought with all sorts of other liens attached. He said on judicial ones the other liens would be cleaned out at the sale. Is this the way you see it?
The state of Virginia is non judicial, with a sale on the courthouse steps usually within 120 days.
Eric thanks for the lesson, my friend and A/R'er Sylvie Conte were just discussing 'foreclosure' and how the definition in the U.S. appears to be different then in Canada.......- thanks for the comment on my post too! :-)