Types Of Foreclosure In The United States

If you are facing foreclosure, the first you have to ask yourself is: “What type of foreclosure am I in for?” Determining what the type of foreclosure helps you better prepare for a defense and the needed documents. Most especially, it gives your foreclosure defense lawyer an idea of how to handle your case towards your advantage.

Judicial Foreclosure.

This type of foreclosure is allowed in all states. This happens when the lender files a civil lawsuit against the borrower and the entire process would be handled by the court. This can be further divided into two: foreclosure by sale and strict foreclosure. Foreclosure by sale requires the home to be auctioned to the highest bidder while in a strict foreclosure, the court sets a date by which the owner must pay the mortgage. If he fails to do so, the court awards ownership of the home to the lender with no auction taking place.

Non-judicial foreclosure.

This process allows the lender to advertise and sell the property at a public auction without court involvement. In this type of foreclosure, the borrower must agree to the process when they took the loan. A power of sale clause is added to the mortgage or deed of trust which gives a third-party trustee the right to sell the property in case the borrower is not able to make the payments.