Non-Judicial Foreclosure: Everything You Need to Know
Foreclosure is a legal process in which a lender seizes a property from a borrower who has failed to make mortgage payments on time. In the United States, there are two types of foreclosure processes: judicial and non-judicial. Non-judicial foreclosure is the most common type of foreclosure process, and it occurs when the lender does not need to involve the court system.
If you are facing non-judicial foreclosure or want to understand how this process works, here is everything you need to know:
How Does Non-Judicial Foreclosure Work?
In states that allow non-judicial foreclosures, lenders can foreclose on properties without going through the court system. Instead, they must follow specific procedures outlined by state law.
The first step in a non-judicial foreclosure is for the lender to provide notice of default to the borrower. This notice informs the borrower that they have defaulted on their mortgage and gives them an opportunity to cure (fix) their default by making up missed payments within a specified timeframe.
If the borrower fails to cure their default within this period, then the lender will proceed with sending out notices of sale. These notices inform borrowers that their property will be sold at auction on a specific date if they do not bring their mortgage current.
On auction day, interested buyers bid on the property until it’s sold; after which point ownership transfers from prior owner(s) (usually now under bank/creditor control) over into new hands/purchaser(s).
What Are The Advantages Of A Non-Judicial Foreclosure?
There are several advantages of non-judicial foreclosure for both lenders and borrowers. One advantage for lenders is that it typically faster than judicial foreclosure because there’s no need for court involvement – saving time/money/resources all around!
Additionally, since many states streamline this process, costs incurred throughout may be lower than that of a more traditional foreclosure. For borrowers, the advantage is that they generally have more time to try and cure their default than they would in a judicial foreclosure.
What Are The Disadvantages Of A Non-Judicial Foreclosure?
Despite some advantages, non-judicial foreclosures also have some disadvantages. One disadvantage for borrowers is that many states do not require lenders to provide notice of sale beyond publishing it publicly; this can lead to situations where borrowers may not know when or where their property will be sold.
Another disadvantage of non-judicial foreclosures is that it can limit legal recourse avenues. In Judicial Foreclosure, the borrower has access to court(s) and judges who may intervene if there are any issues with notices or other processes involved – whereas in non-judicial scenarios the borrower effectively forfeits these options altogether due to lack of involvement by said courts.
Can You Stop A Non-Judicial Foreclosure?
Yes! There are several ways you could potentially stop a non-judicial foreclosure from occurring:
1) Cure Your Default: If you missed mortgage payments, bring your account current before the auction date specified.
2) Reach an Agreement With Your Lender: Often times banks/creditors want nothing more than what’s owed – so reach out directly (or through counsel) and attempt negotiation toward repayment plans or alternative arrangements rather than face lossing control over property via auction process(es).
3) Seek Legal Help: An experienced attorney might help find possible defenses against the bank/creditor’s claims on ownership/control rights over targeted properties under circumstances such as wrongful foreclosure proceedings (example: not abiding by state law requirements/codes), discrimination practices, illegal collection tactics (such as robo-signers), etc.
Conclusion
Non-judicial foreclosures are common in many states throughout America due largely because they’re often faster and less expensive compared with alternatives like judicial foreclosures. However, these types of proceedings can have disadvantages for borrowers – such as limited legal recourse avenues should something go wrong during the process or if a borrower fails to act before it’s too late. As always, it’s important to consult with an attorney if you’re facing possible foreclosure in order to explore all options and potential defenses available under your particular circumstances.