What are the steps in a residential foreclosure process?

The two most common forms of residential foreclosure are judicial foreclosure and non-judicial foreclosure.  State law determines which type of foreclosure a lender may use when a homeowner defaults on a mortgage loan.  In sixteen states, lenders may only utilize the judicial foreclosure process.  In two states, non-judicial foreclosure is the only legal method of foreclosing.  In the majority of states, lenders may use either judicial or non-judicial foreclosure. 

Non-judicial foreclosure allows a lender to foreclosure without first obtaining a court order.  Although the procedures for conducting a non-judicial foreclosure sale vary from state to state, a lender must give the borrower and other interested parties, such as junior lien holders, notice of the sale at least a few weeks before it is to take place.  A lender may also be required to record a Notice of Default in the real estate records in the county where the property is located.  Additionally, some states require a foreclosing lender to advertise the foreclosure sale in a newspaper approved to publish legal notices for several weeks before the sale is scheduled to occur. 

Once all notice requirements have been satisfied, the lender will conduct the foreclosure sale on the courthouse steps or at another authorized location.  A non-judicial foreclosure sale is an auction type sale with the property being sold to the highest bidder. 

A judicial foreclosure sale requires the lender to file a lawsuit and obtain a court order before the sale may proceed.  The lender must prove to the court that it has a legal right to foreclose and that the homeowner has defaulted on the mortgage loan.  Additionally, the lender must tender evidence of the total amount due on the loan before the court will issue the order authorizing the foreclosure. 

If you have questions about the foreclosure laws in your state, you should contact a qualified real estate attorney.  A real estate attorney will review your case and advise you of any foreclosure defenses you may have.