Foreclosure Laws

Foreclosure procedures by state

Each state has foreclosure laws that dictate the manner of foreclosure in that state. One of the most important distinctions in a foreclosure process is whether the foreclosure is conducted through the court system (judicial) or outside the court system (non-judicial).State law governs whether judicial or non-judicial foreclosure is used. Some states allow both types of foreclosure, but each state usually has one type that is more commonly used.In states that allow both types of foreclosure, the document used to secure the mortgage loan usually determines whether judicial or non-judicial foreclosure is used.Typically, a deed of trust allows for non-judicial foreclosure while a mortgage allows for judicial foreclosures, although some mortgages include a clause allowing the lender to sell the property without going through the court system in the case of a default.

To start a judicial foreclosure, the lender files the appropriate court action against the owner in default. Usually this is in the form of a lis pendens (pending lawsuit) against the owner. If it rules against the owner, the court will order a public sale of the property.

The trustee named in the deed of trust has to record a public notice of default to initiate a non-judicial foreclosure. If the owner in default does not pay off the default within a certain time frame, the trustee can schedule a public sale of the property.