Foreclosure is a process that allows a lender to recover a debt by forcing the sale of property used as collateral. For homeowners struggling with missed payments, the threat of foreclosure can create significant stress. Understanding how different types of foreclosure work may offer clarity and help identify possible next steps.
There are two main types of foreclosure used across the United States. These are judicial foreclosure and non-judicial foreclosure, and each follows a different process.
Differences between judicial foreclosure and non-judicial foreclosure
Understanding how judicial and non-judicial foreclosures differ can help clarify what to expect if a foreclosure action is initiated:
- While judicial foreclosure requires the lender to file a lawsuit and proceed through the court system, non-judicial foreclosure follows procedures set out in a mortgage or deed of trust without court involvement.
- While judicial foreclosure typically takes longer due to court schedules and legal filings, non-judicial foreclosure often moves more quickly based on timelines set in statute.
- While judicial foreclosure allows the borrower more opportunities to contest the process in court, non-judicial foreclosure generally limits a borrower’s ability to delay or challenge the sale.
- While judicial foreclosure usually ends with a court-ordered sale or title transfer, non-judicial foreclosure permits a trustee to conduct a public auction without a judge’s approval.
Both foreclosure types can result in the loss of a home, but the process leading to that outcome differs significantly. For borrowers, recognizing these differences may help determine how much time is available and what legal steps, if any, can be taken to prevent a forced sale.
Legal guidance can help evaluate the type of foreclosure at hand, review documentation, and identify possible defenses or resolutions.