by The Armchair Geek

Created on: September 24, 2007

The Impact of Your State's Foreclosure Law on Home Repossession

If you are a homeowner facing foreclosure, the specific types of foreclosure laws of your state will determine the process involved. Foreclosure laws differ by state, and significantly impact the time lines of the proceedings, your right of redemption, as well as your lender's right to come after you for any loan balance that may remain after the foreclosure sale. However, regardless of the state your home is in, there are two procedures through which your lender can foreclose on your property: - judicial foreclosures or a non-judicial foreclosures. The main difference between the two is that the judicial procedure involves court action, while the non-judicial does not.

The foreclosure process used by a given state will primarily be determined by the means by which real property is purchased in that state: is it by mortgage or by deed of trust. If homes are purchased using deeds of trust, then foreclosures in your state will be conducted through the non-judicial process; if purchased using mortgages, then judicial foreclosures will be used.

Judicial Foreclosures

To foreclose under this procedure, the lender has to file a lawsuit so as to obtain a court order to foreclose. To do this, they have to prove that you are in default on your home loan.

When you are behind on a number of your mortgage payments, the lender will first attempt to resolve the matter with the you through alternate means, so as to avoid foreclosure. Once these means have been exhausted, and the you still cannot pay the defaulted amount, the lender will have a lawyer pursue court action.
The lawyer will first make another attempt to resolve the matter with you. If this is still not possible, the she will file a lis pendens (meaning "action pending") with the court. This serves to give notice to the public that a pending foreclosure action has been filed against you. Filing the lis pendens is intended to provide the required evidence of default, and to get approval from the court to initiate the foreclosure.

Once the court declares a foreclosure, your property will then be auctioned to the highest bidder.

Non-judicial Foreclosures

This procedure is also called Foreclosure By Power of Sale. It is based on a deed of trust, which typically contains a "power of sale clause". In the event of a default by the borrower, this clause pre-authorizes the lender to sell off the property to pay the home loan balance. It enables the trustee (your lender or the lender's representative) to initiate the foreclosure process and sell the repo home without having to get a court's approval.

The trustee must issue a notice of default, as well as notify the trustor (you, the borrower) regarding your repo home status. If you do not respond to this notice, the trustee will initiate the foreclosure process, which will lead to the sale or auction of the repo property.

To find get more information on the foreclosure laws and procedures in your state, take a look at these websites:

http://www.foreclosurelaw.org/
http://www.fo reclosures.com/www/pages/state_laws.asp?ChangeStateP ref=true
http://www.foreclosureuniversity.com/studyce nter/foreclosurelaws/

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