Foreclosures take one of two major paths: judicial (in court) or nonjudicial (out of court). If a mortgage secures your home loan, chances are good you'll go through a judicial foreclosure. If your loan is secured by a deed of trust, you'll probably go through a nonjudicial foreclosure. The real estate industry in a particular state and the laws that industry's lobbyists have pushed through the state legislature pretty much determine whether mortgages or deeds of trust are used there.
Again, mortgages are often foreclosed in court, while deeds of trust are typically foreclosed nonjudicially. Though, it isn't always clear what the foreclosure process will be. Even in a state where foreclosures are normally nonjudicial, the lender might choose to foreclose through the courts. Also, in some states that use mortgages, nonjudicial foreclosures are common. And in some states, the borrower has a right to request a judicial foreclosure even if the law authorizes a nonjudicial foreclosure.
A judicial foreclosure often takes longer, a lot longer, than a nonjudicial one. A judicial foreclosure also gives you a ready-made opportunity to oppose the foreclosure and assures that your home won't be lost to the process unless a judge signs off on it. Judicial oversight is an important protection against illegal tactics by the foreclosing party.
In judicial foreclosures, your lender—through its foreclosure attorney—gets things started by filing a foreclosure lawsuit in the local court. You'll receive official notice of the suit when a sheriff or process server personally serves you with (or mails or posts on your door in some cases):
If you don't respond, the lender will most likely get a default judgment authorizing a foreclosure sale. A "default judgment" means that you automatically lose the case because you didn't respond to the suit. If you respond by filing an answer with the court, the foreclosing party can't get a default judgment.
Instead, it will likely file a motion for summary judgment. You must respond to the motion, or else the lender will win automatically. Even if you respond, the court may grant summary judgment in favor of the foreclosing party if there's no dispute about the important facts of the case. But if you have a valid defense and the court denies summary judgment, the case will proceed toward a trial, at which you and the lender will present your evidence and arguments. The judge will then:
If you live in one of the states listed here, the foreclosure will probably take place in court: Connecticut, Delaware, District of Columbia (sometimes), New Jersey, New Mexico, Florida, Hawaii (usually), Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, New York, North Dakota, Ohio, Oklahoma (if the homeowner requests it), Pennsylvania, South Carolina, South Dakota (if the homeowner requests it), Vermont, and Wisconsin.
Judicial foreclosures are seldomly permanently derailed, but they can be significantly delayed. If you have grounds to fight the foreclosure, either because the foreclosing party can't prove its case or because you offer proof that casts doubt on the foreclosure's legality, it can take many months before the case is resolved one way or the other.
Eventually, though, if the foreclosure is legally appropriate, the judge will authorize your house to be sold at a foreclosure sale (auction).
With a nonjudicial foreclosure, a court won't oversee the procedure—except in a few states, where a court signs off on the process.
Generally, a deed of trust authorizes the entity named as trustee to foreclose on the property if you ever default. The deed of trust typically contains a "power of sale" clause that allows the foreclosure to proceed outside of court. (Though, in some states, mortgages have power of sale clauses. In these states, nonjudicial foreclosures are typical.)
If you live in one of the states listed here, the foreclosure will probably be nonjudicial: Alabama, Alaska, Arizona, Arkansas, California, Colorado, District of Columbia (sometimes), Georgia, Idaho, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico (allowed), North Carolina, Oklahoma (unless homeowner requests judicial), Oregon, Rhode Island, South Dakota (unless homeowner requests judicial), Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and Wyoming.
Even if lenders usually use a nonjudicial procedure in your state, your foreclosure could be judicial for a variety of other reasons, like because of a title issue.
You don't have the opportunity to raise defenses to the foreclosure in court as part of a nonjudicial foreclosure. So, if you want to contest the foreclosure, you'll have to file a lawsuit yourself.
You'll most likely need to hire an attorney to be successful in fighting a judicial or nonjudicial foreclosure. Any given foreclosure or legal situation has many potential claims and defenses, so it's a good idea to seek the advice of a local lawyer or a legal aid organization to explore all possible options that might be available in your particular situation. Unless the lawyer thinks you have a very good case, you might want to look into alternatives, like trying to get a loan modification or giving up your home through a short sale or deed in lieu of foreclosure.
If you want to learn about possible ways to avoid foreclosure—like with a loan modification, short sale, or deed in lieu of foreclosure—consider also talking to a HUD-approved housing counselor.