Judicial foreclosures take place through the state court system. While all states allow judicial foreclosures, some require it. To find out if you live in a judicial foreclosure state, check our Summary of State Foreclosure Laws.
If you are facing a judicial foreclosure, it's important to understand the basic process and timeline for the foreclosure.
(To learn about the difference between judicial and nonjudicial foreclosure, see our Judicial v. Nonjudicial Foreclosure topic area.)
Judicial foreclosure procedures and timing vary by state. But generally, this is how a judicial foreclosure goes.
The first month that you don’t make your monthly mortgage payment, the loan servicer will probably call you to inform you that you are late on your payment and ask when you will be sending in funds.
If you skip a second payment, the loan servicer will continue to make collection calls and inquire why you have not made the payments. They make ask you to make a payment over the phone at the time they call.
Generally, after you miss three or four payments the loan servicer will then send you a letter (referred to as a “Breach Letter”, “Demand Letter”, or “Notice of Acceleration”) informing you that you have 30 days to bring your mortgage current or the loan will be accelerated. When a loan is accelerated, you have to immediately pay the entire balance of the loan, not just the past due amounts. This sets the stage for the judicial foreclosure procedure to begin.
To avoid foreclosure, you will have to bring the loan current by paying the full past due amount shown in the letter before the 30 days expires. If you send a partial amount, the lender will most likely send it back to you.
After you miss four payments (that is, once you're more than 120 days delinquent), the loan servicer will, in most cases, refer your file to an attorney to begin foreclosure proceedings.
The foreclosure attorney will prepare the complaint for foreclosure and file it with the court, usually in the county where the property is located. The lawsuit will ask the court for a judgment authorizing a foreclosure sale. The sheriff or a process server will serve you with a summons and the complaint for foreclosure.
Once served, you will have a certain amount of time, typically 20-30 days, to file an answer with the court. You can choose to file an answer, but you do not have to do so. If you do not file an answer, the lender will be granted a default judgment, meaning you automatically lose the case, and the lender will be allowed to proceed with a foreclosure sale.
However, if you file an answer, you can raise procedural and substantive defenses. The foreclosure can be halted or significantly delayed if you have a good defense. (Read about defenses to foreclosure.) If you file an answer, but are in default and do not have a legal defense, the lender will still be granted a judgment and allowed to proceed with a foreclosure sale.
Once the lender has been granted a judgment of foreclosure, notice of the sale might be published. The foreclosure sale will take place on the designated time and date and the property will be sold to the highest bidder. The foreclosing lender can credit bid up to the total amount of the debt, plus foreclosure fees and costs, while any other parties must bid in cash or a cash equivalent, like a cashier's check. In the majority of cases, the lender will be the high bidder at the foreclosure sale.
Certain states provide for a redemption period following the foreclosure sale. A redemption period is a specific time period given to borrowers in foreclosure during which they can buy back, or “redeem,” their property. During the redemption period, you sometimes (depending on state law) can remain in home even though you are no longer making mortgage payments and even if you do not redeem. (Learn more about redemption periods.) To learn the specific redemption period for your state, check our Summary of State Foreclosure Laws.
Many states require that the court review the foreclosure sale procedures and confirm the sale before the foreclosure is finalized. Once the foreclosure sale is confirmed, title passes to the new owner and the foreclosure process is finished. If you have not already vacated the home, you will be evicted. See our article Foreclosure Timeline: After You Get Notice to Leave to learn more about eviction following foreclosure.
Depending on several factors, including the state where you live and whether or not you file an answer, a judicial foreclosure process can take several months or even years to complete. To learn more about foreclosure timelines, see our articles Foreclosure Timeline: After You Receive a Formal Notice of Intent to Foreclose and How Foreclosure Works. For a good estimate of the timeline in your area and in your particular situation, talk to a local foreclosure attorney.