Timeline for Foreclosure: All 50 States

The first thing most homeowners and real estate investors facing foreclosure want to know is, “What is the timeline for foreclosure?” In other words: “how long does it take?” The answer is that the foreclosure process and timeline vary from state to state. This article provides the information and resources you will need to learn about the foreclosure laws, procedures, and deadlines for all 50 states.

As mentioned, each state will generally have a different set of rules and a different schedule for foreclosure.

• 20 states use only “judicial” foreclosures.
• Five states and the District of Columbia use only “non-judicial” foreclosures.
• 25 states use both of them Judicial and non-judicial foreclosures. ##

## Of the 25 states that use both types of foreclosure, non-judicial foreclosures are the most common. In fact, non-judicial foreclosure is the most widely used form of foreclosure nationwide.

I. JUDICIAL vs. NON-JUDICIAL FORECLOSURES:

The main difference between the two classes of foreclosure is the involvement or non-involvement of the court system. As you may have guessed, judicial foreclosures are processed through the courts. Non-judicial foreclosures are not.

Regardless of the type used, the term for foreclosure is always preceded by a borrower defaulting on their mortgage payments. Most lenders do not threaten homeowners with foreclosure until two or three payments have been missed. However, once the lender concludes that the mortgage is in default and the homeowner will not catch up on his past due payments, the lender makes a legal filing and the term for foreclosure begins.

A. JUDICIAL FORECLOSURES:

In a judicial foreclosure, the lender files a formal complaint with the court and records a “Lis Pendens” legal notice. The complaint must state the details of the debt and why the lender should be allowed to foreclose on the property. Lis Pendens gives public notice that the home is subject to foreclosure proceedings and implements the legal schedule for foreclosure.

If the court finds that the debt is legitimate and delinquent, it will send a notice to the landlord demanding payment of the amount owed (plus penalties and foreclosure costs). The borrower usually receives 30 days to respond and pay off the debt. If they don’t, the court will enter a judgment in favor of the lender, stating that the home will be sold at a “bailiff’s sale” auction.

After the judgment is entered, in most states that use judicial foreclosures, the landlord has about 90 days prior to the Sheriff’s Sale to pay the full amount owed and stop the foreclosure process. There are other alternatives that could stop the foreclosure schedule during this 90-day period:

• Negotiate a “Forbearance Agreement” with the lender that reviews the terms of the loan to the satisfaction of both parties. (Most lenders no they want to foreclose because it can cost them a lot of money).
• Sell ​​the house.
• Refinance the loan.
• Declare bankruptcy.

If the foreclosure process is not stopped, the property goes to a “Sheriff’s Sale” where it is auctioned to the highest bidder and extinguishes all property rights of the delinquent homeowner. If no one buys the property at auction, the title to the home returns to the lender and becomes what is known as an “REO Property.” This means ”
Real
mestate
ORwned “(by the bank or lender).

How long does the judicial foreclosure process take?

This is almost impossible to predict. The judicial schedule for foreclosure is entirely driven by the court calendar and literally “at the mercy of the court.” However, most experts will agree that judicial foreclosures can often take more than a year to complete.

Important note: Even after a home has been sold at the sheriff’s sale, some states will allow the homeowner to repossess their home. This is known as a “payback period” and is a period of time after the foreclosure process has been completed. Although the property will now have a new owner, the former owner can still claim title to their home by paying the full mortgage amount on the original home plus penalties and foreclosure costs.

B. NON-JUDICIAL FORECLOSURES:

Also known as “power of sale” foreclosures, non-judicial foreclosures are carried out outside of the court system by a third party “fiduciary” or attorney. This foreclosure process is used when there is a “power of sale clause” in a mortgage or deed of trust. This clause establishes that the borrower accepts the sale of his property to pay the balance of his mortgage loan in case of default.

As with judicial foreclosures, most lenders will not begin the non-judicial foreclosure process until several payments have been missed and they are convinced that the owner will not catch up on his past due payments. However, once the lender determines that the borrower is in default, the lender makes a legal presentation and the term for foreclosure begins. This submission is known as a “Notice of Default” (NOD).

After the NOD is filed, the owner usually has a 90 days “Payback period” to catch up on late payments and stop foreclosure before the lender can take further action. There are other alternatives that could stop the foreclosure schedule during the Reinstatement Period:

• Negotiate a “Forbearance Agreement” with the lender that reviews the terms of the loan to the satisfaction of both parties. (Most lenders no they want to foreclose because it can cost them a lot of money).
• Sell ​​the house.
• Refinance the loan.
• Declare bankruptcy.

If the borrower remains in default at the end of the Reinstatement Period, a “Trustee’s Notice of Sale” will be filed with the published date and time for a property sale auction. After the Trustee’s Notice of Sale is filed, the owner usually has another
21 days prior to the auction date. During this period, the borrower can still stop the term for foreclosure with any of the alternatives mentioned above in the Repayment Period.

If the foreclosure process is not stopped, the property goes to a “Trustee Sale” where it is auctioned to the highest bidder and extinguishes all property rights of the delinquent owner. If no one buys the property at auction, the title to the home returns to the lender and becomes what is known as an “REO Property.” This means “Real mestate ORwned “(by the bank or lender).

Important note: Similar to judicial foreclosures, after a home has been sold at the trustee’s sale, some states will allow the homeowner to repossess their home. This is known as a “payback period” and is a period of time after the foreclosure process has been completed. Although the property will now have a new owner, the former owner can still claim title to their home by paying the full mortgage amount on the original home plus penalties and foreclosure costs.

THE BOTTOM LINE:

Regardless of the foreclosure process used, it is very important to know the laws and procedures in your particular state. To help with that, here is a link to the Foreclosure Process: All States.