Foreclosure Laws in Different States

foreclosure1Foreclosure is the process by which a homeowner’s rights to a property are forfeited because of failure to pay the mortgage. If the owner cannot pay off the outstanding debt or sell it via short sale, the property then goes to a foreclosure auction. If the property does not sell at auction, it becomes the property of the lending institution. Foreclosure is very complicated and it’s laws vary by state so it would be advisable to consult with a real estate attorney in your particular state.

As foreclosure process can be very confusing and complicated, we decided to describe it step by step.

Let’s assume you are 90+ days (note, that it varies by state) behind in your mortgage payments. Your lender serves you with a “Notice of default“. Don’t stress out, that does not mean that you lose your house straight away. You’ll be given a certain time period (it also varies by state) to ‘cure’ the default and avoid foreclosure. If the borrower pays off the default, foreclosure ends and the borrower avoids home eviction and sale. If the default is not paid off, foreclosure continues.

In case when the default has not been cured, you get a “Notice of Sale“, which will be filed with the country clerk’s office. “Notice of Sale” is published in your local newspaper, which may create an embarrassing situation for you and your family.

The final step in the foreclosure process is eviction. This is a separate procedure from foreclosure that is often confused by home owners who are facing foreclosure. Eviction is used to remove property from those who are currently in possession and it’s court supervised.

Foreclosure evictions vary from state to state and depend on whether the foreclosure follows a “Judicial” or “Non-Judicial” path. Let’s define the difference between these two. They involve very different processes. These terms refer to how individual states handle real estate foreclosure. Under both systems, time frames and terms vary widely from state to state.

1. Judicial Foreclosure

A judicial foreclosure is a court proceeding that begins when the lender files a complaint and records a notice in the public land records announcing a claim on the property to potential buyers, creditors and other interested parties. The complaint describes the debt, the borrower’s default and the amount owed. The complaint asks the court to allow the lender to foreclose its lien and take possession of the property as a remedy for non-payment.
Twenty two states use judicial procedures as the primary way to foreclose.These include: Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Vermont and Wisconsin.
2. Non-Judicial Foreclosure
The requirements for non-judicial foreclosure are established by state statute; there is no court intervention.
To find out more about foreclosure laws, you are more than welcome to watch our video

The foreclosure process is very complicated and it is advisable to find local real estate lawyer to assist you with your property foreclosure, especially if you live in a state that follows a judicial foreclosure. Legal Bistro is an online community that will help you find licensed real estate attorneys in your particular state. Just go to Legal Bistro website and let the lawyers do the job!

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