CandleFocus

Judicial Foreclosure

Candlefocus Editor
Foreclosures through the court systems, referred to as judicial foreclosure, are uncommon in comparison to the more widely used non-judicial foreclosure. In the judicial process, a court of law orders a property to be foreclosed to enforce a mortgage note. This type of foreclosure is often employed when a mortgage note does not contain a power of sale clause. A power of sale clause is authority granted to a lender allowing them to foreclose a mortgage due to a borrower’s default, without having to go through the lengthy foreclosure process in court.

The judicial process begins when the lender files a foreclosure lawsuit against the borrower. After filing the suit, the process is considered to be in the “discovery phase”. This is when the lender can collect evidence and identify assets of the borrower in order to collect on the debt. Once the process progressing to the “default hearing” phase, the lender can present its evidence and determine whether the borrower is actually responsible for the mortgage debt. The borrower will have the opportunity to legally challenge the foreclosure. If they do not dispute the charges or if they are unsuccessful in the challenge, then a “default judgment” will be entered and the property will be scheduled for foreclosure sale.

At the foreclosure sale, anyone can bid on the property for an amount that must satisfy the amount of the outstanding debt and fees. These bids must be confirmed in a local court of law before the property is officially transferred from the borrower to the lender. The entire judicial foreclosure proceedings can take anywhere from months to years to complete.

The judicial foreclosure process is not only time consuming, but also complex and expensive. The lender often incurs legal costs associated with filing a lawsuit, notifying the borrower properly, and utilizing the services of an attorney. The borrower also usually incurs attorney fees and other financial costs due to the impending foreclosure. In addition, the foreclosure process may be delayed or postponed due to various legal proceedings, complicating matters further.

Foreclosures are, unfortunately, a common occurrence throughout the country and the judicial procedure, while it is not used as often as the non-judicial process, is another option due to certain circumstances. For example, if your mortgage does not have a power of sale clause, then it is likely that a judicial foreclosure will take place. Knowing the variation of these procedures helps individuals avoid potential difficulties, as well as understand their rights and obligations for these matters.

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