How Judicial Foreclosure Works

Learn the basics about judicial foreclosures.

Updated by , Attorney

"Foreclosure" happens when you fall behind on your mortgage payments, and the owner of your loan (called the "bank" in this article) uses state procedures to sell your house to repay the debt. Foreclosure works differently in different states.

In some states, the bank has to file a lawsuit to foreclose, called a "judicial foreclosure." In others, the bank can choose to foreclose without going to court, a "nonjudicial foreclosure."

Judicial Foreclosure

In a judicial foreclosure, the bank must file a lawsuit to get the process started. A judicial foreclosure typically takes several months or more, giving you time to look for another place to live and to save some money for the future. Another advantage is that you can raise in court any legal defenses you might have to the foreclosurewithout having to file your own lawsuit.

States Using Judicial Foreclosure

With some exceptions, foreclosures go through court in the following states: Connecticut, Delaware, District of Columbia (sometimes), Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana (executory proceeding), Maine, Nebraska (sometimes), New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma (if the homeowner requests it), Pennsylvania, South Carolina, South Dakota (if the homeowner requests it), Vermont, and Wisconsin.

Procedures in a Judicial Foreclosure

Here's how a typical judicial foreclosure might proceed.

You get behind in your mortgage payments. Under federal law, in most cases, the bank must wait until you are more than 120 days delinquent in payments before starting a foreclosure, no matter if it is judicial or nonjudicial.

The bank sends a letter notifying you of its intent to begin foreclosure. In many cases, as required by the loan contract, the bank sends a letter, called a "breach" letter, informing you that a foreclosure will begin unless you make up the missed payments, plus costs and interest. The letter may be sent during the 120-day preforeclosure period.

The bank files a lawsuit. If you don't make up the missed payments, the bank will then go to court and file a lawsuit asking the court for the right to sell the home and apply the proceeds from the sale to the debt. If state law allows for it, the complaint might also ask the court to grant a deficiency judgment if selling the property won't fully pay off the debt. (In some states, a deficiency judgment is allowed after a nonjudicial foreclosure as well.) If granted, you remain responsible for the outstanding balance left on the loan after the foreclosure sale. Some states don't allow deficiency judgments under certain circumstances.

The bank gives you notice of the lawsuit. The bank does this by delivering a summons and complaint to you (called "serving" you with a summons and complaint in legalese).

You have a chance to respond. The summons and complaint give you a deadline by which you must respond if you choose to contest or argue the lawsuit, usually between 20 and 30 days. Whether you file a response is up to you. If you don't respond, the bank will ask the court for a default judgment and will automatically win the suit. The court then issues a default judgment authorizing the bank to sell your home.

If you do respond to the suit, you'll have the opportunity to tell a judge why you think you have a legal right to keep your house and that foreclosure is not warranted. The better your defenses, the longer the process will drag out in court. Even if you win, though, it might be a temporary victory if the bank can fix whatever problem caused it to lose this time.

The court enters a judgment in favor of the bank, and a foreclosure sale is held. If the court decides in favor of the bank, it will enter a judgment ordering the sale of your property to satisfy the debt. At the sale, the bank will likely make a credit bid. If no one makes a higher bid on your home at the foreclosure sale, the bank gets the ownership of the property.

Right to redeem. A few states give you some time after the foreclosure auction to redeem the property and recover ownership of the home by paying off the successful bidder or paying off the entire mortgage debt.

You leave voluntarily or get evicted. If you don't leave the property when your legal right to remain in the home ends (which depends on state law), you will receive an official notice to leave the property.

Getting Help

If you're facing a foreclosure and want to learn about potential defenses, whether you're likely to face a deficiency judgment, or how to avoid a foreclosure by working out an alternative, like a loan modification, consider talking to a foreclosure attorney. Contacting a (free) HUD-approved housing counselor is also a good idea.

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