What is a Judicial Foreclosure?

The term "judicial foreclosure" refers to the process of repossessing a property through the courts when there is no power of sale clause in the mortgage. The proceedings of the foreclosure are dealt with and resolved by the courts in this instance.

A clause known as a power of sale can be written into a mortgage. In the event that the borrower fails to make their mortgage payments, the document grants the lender permission to sell the property in order to satisfy the debt; by doing so, legal action can be avoided. A lender's rights to pursue a foreclosure include, in many states' legal systems, the ability to exercise a power of sale.

The term "judicial foreclosure" is used to describe the process of foreclosing on a property through the judicial system.

• This kind of foreclosure process takes place frequently when a mortgage note does not contain a power of sale clause. This clause would give the mortgage lender the legal authority to sell the property in the event of a default on the mortgage.

• A judicial foreclosure is typically a drawn-out process that can take anywhere from a few months to several years to finish.

Understanding Judicial Foreclosure

The term "judicial foreclosure" is used to define foreclosure cases that are heard in the judicial system. When a home is sold to satisfy an outstanding mortgage or other loan, this process is known as foreclosure. The process is always carried out in accordance with the legal requirements of the jurisdiction in which the foreclosure property is located, which is almost always state law. In many states, the process of foreclosing on a home must go through the courts. However, in other states, the process of foreclosing on a home can either be judicial or nonjudicial.

In the event that the court regulates that the mortgage payment has been delayed, the court may order an auction to be held in direction to sell the property and acquire the necessary funds to repay the mortgage lender. This is in contrast to the nonjudicial foreclosures, which involve no involvement from the courts in the processing of the foreclosure.

In many states, judicial foreclosure is obligatory in order to safeguard any remaining equity that the debtor may have in the property. Judicial foreclosure serves another purpose, which is to prevent dishonest lenders from engaging in strategic disclosures. In the event that the auction does not get in sufficient funds to repay the mortgage lender, the previous homeowner will be still responsible for paying off the remaining balance  amount on the mortgage.

120 days is the amount of time a borrower must be behind on their mortgage payments before a lender is permitted to begin the process of foreclosing on their home.

How Judicial Foreclosure Works

Depending on the state, the length of time that it takes to complete a judicial foreclosure can range anywhere from six months to close to three years. In order to initiate the foreclosure process, the mortgage servicer, also known as the company that is paid for mortgage services, must wait until the borrower has been behind on payments for a period of one hundred and twenty days.

At this point, the mortgage servicer will send a breach letter to the party that is responsible for the foreclosure, informing the debtor that they are behind on their mortgage payments. After this point, the debtor typically has a period of thirty days to make up for the default on the loan; however, if they are unable to do so, the loan servicer will proceed with the foreclosure process.

Next, the party that is foreclosing on the property will file a lawsuit in the county where the property is situated, asking the court for permission to sell the house in order to satisfy the debt. The party that will be foreclosing on the property will typically include a petition for foreclosure as part of the lawsuit they will file. This petition will detail the reasons why the judge should issue a judgement of foreclosure. If the borrower does not have a defense that justifies the delinquent payments, the court will almost always decide in favour of the lender.

The party that is foreclosing on the property may or may not be entitled to a deficiency judgement, depending on the state. A deficiency judgement makes it possible for a house to be sold at a foreclosure sale for an amount that is lower than the amount still owed on the mortgage. The deficiency is the difference between the amount owed and the price at which the property was sold at foreclosure. In the majority of states, the party that is in the process of foreclosure has the ability to obtain a personal judgement against the borrower for the amount of the deficiency.