If you default on your mortgage loan, the bank can go through a specific legal process, called "foreclosure," to sell your home and pay off your debt. Depending on state law and the circumstances, the bank will either:
You’ll potentially face a summary judgment if you're in a judicial foreclosure, but not in a nonjudicial one. “Summary judgment” is a judgment in favor of the foreclosing party (called the "bank" in this article) after a borrower formally responds to a foreclosure lawsuit, but the response doesn’t raise any valid issues or defenses. Once the bank gets summary judgment, it can proceed with a foreclosure sale.
To begin a judicial foreclosure, the bank files a complaint, petition, or similar document with the court. It then serves a copy of the complaint to you, along with a "summons." The summons will tell you about your rights and say how many days you get to file a formal response in writing, called an “answer,” with the court, usually 20 or 30 days. If you decide to file one, the answer must contain legally acceptable responses to the allegations against you in the complaint. An answer is your chance to respond to the complaint's claims and formally raise any defenses or counterclaims you have against the bank or the loan servicer.
If you don’t file an answer, the bank will ask the court for a "default judgment." With a default judgment, you automatically lose the case. The bank will get everything it asked for in the complaint, including the right to sell your home at a foreclosure sale and perhaps a deficiency judgment, depending on state law and the circumstances.
But if you file an answer to the suit, the bank won’t be able to get a default judgment from the court. Instead, the bank will probably file a motion for summary judgment. In this kind of motion, the bank asks the court to rule in its favor without holding a trial or any further legal proceedings because your answer wasn’t sufficient. For example, the case's main facts aren’t in dispute, any defenses you’ve raised lack merit, or you didn’t show that the bank or servicer violated the law.
If the court grants summary judgment in favor of the bank, typically after a hearing, the bank wins the case, and your home will be sold at a foreclosure sale. If the court denies the bank’s motion for summary judgment, though, litigation will continue, including discovery and trial. At the end of the trial, the judge will likely either:
With a nonjudicial foreclosure, subject to a few exceptions, the foreclosure usually happens totally outside of the court system. You won’t get a chance to answer a foreclosure complaint, and summary judgment won’t be part of the process. Once the bank finishes the steps required under state law to foreclose—like mailing you a foreclosure notice, publishing a notice of sale in a newspaper, and posting sale information at your home—it will hold a foreclosure sale.
If you want to fight a nonjudicial foreclosure in court, you’ll have to file your own lawsuit. Be aware that nonjudicial foreclosures usually move quickly. So, if you get notice about a nonjudicial foreclosure and want to challenge it, talk to an attorney about filing a suit as soon as possible.
If you want to file an answer to a foreclosure lawsuit, consider hiring a foreclosure lawyer. A lawyer can tell you about available defenses in your situation, prepare a response to file in court on your behalf, argue your case at a summary judgment hearing if necessary, and represent you throughout the entire foreclosure process. If you need information about loss mitigation options, it's also a good idea to talk to a HUD-approved housing counselor.