What’s the Difference Between Judicial and Non-Judicial Foreclosure?
During a judicial foreclosure, once the bank or lender files for a foreclosure lawsuit the homeowner will receive a summons and a copy of the foreclosure complaint. At this point, you, the homeowner, can let the foreclosure go on, or you can go and try and contest it in court. During a judicial foreclosure, you can find a lawyer to defend you in court. If you don’t, a judge will proceed with the sale and they’ll bundle your property with other “foreclosures” that have yet to actually be foreclosed on. An auction will be held on all these properties at the same time, and if some don’t sell, they’ll be “sold” back to the bank, or in other words, they’ll be gifted back to the bank to sell at their own leisure.
In a non-judicial foreclosure, the mortgage details a deed of trust that is transferred once a homeowner defaults on the loan. State law will protect you in how much of a time frame is provided to the homeowner once the property begins the foreclosure process and how the trustee will space out the foreclosure milestones. For example, after the lender serves the homeowner with a notice of default, the homeowner is required to still have 120-days to make up the missed payments. If the homeowner, then, can’t make up the payments or arrange a new payment plan with the lender then the homeowner will receive a notice when the home is going to be sold on a specific date.
At that point, the lender will often appoint a third-party auctioneer that will auction off the house as best as they can, and if it doesn’t sell and no one meets the minimum bid for the home, it then becomes bank-owned and the bank has to market it and sell the property on their own.
What Can The Bank Not Do During a Foreclosure?
Land ownership built the U.S. and for that reason, there is quite a bit of legal protection surrounding you and your land. So when it comes to what the bank can’t do to you in the event of a foreclosure, the list is rather long. For example, in some states, banks are required to decide if a homeowner qualifies for a “loan modification or another type of help to keep them from foreclosing on the house. If the bank is in the process of foreclosing on you while they’re seeking a loan modification, that could be illegal. In fact, “dual tracking” which is what that process is called, is illegal in many states. Additionally, if you apply for a loan modification, the bank cannot turn around and push the foreclosure. If you’re in the middle of foreclosure and you apply for a loan modification, they are not allowed to continue with the foreclosure.
You Won’t Be Evicted All-Of-A-Sudden
The bank cannot legally kick you off of your own property. They first have to get a court order and file an eviction notice. There will be several notices in the mail before you are actually evicted, so you’ll know it’s coming, and it won’t simply appear. If the padlock does appear without the proper eviction steps being taken, you have the right to pursue legal recourse.