If you’re facing foreclosure and can’t afford a lawyer, it helps to know whether your home is in a judicial or non-judicial state.
More than half of the states have a non-judicial foreclosure proceeding where a mortgage company can take your home with little judicial “fuss”. In these cases, a homeowner must be vigilant and proactive to get a judicial proceeding. The remaining states have a judicial foreclosure process, but judicial obstacles and mortgage company machinations–both legal and illegal–await homeowners who dare to fight back.
Still, you have a chance to at least stay in your home longer if you know the rules for foreclosure in your state. We’ll take a look at the differences between the two types of foreclosures and the ways you can protect your home in each.
Judicial and Non-judicial Foreclosure States
Each state’s foreclosure laws differ, so below are general insights. Look to the statutes and rules in your state to determine the exact steps you must take to keep your home.
In judicial foreclosure states, a lender has to sue you in court in order to foreclose on a house.
Judicial states include Connecticut, Delaware, District of Columbia (not in every case), Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana (executory proceeding), Maine, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma (homeowner must request the hearing), Pennsylvania, South Carolina, South Dakota (if requested by homeowner), Vermont, and Wisconsin.
In a non-judicial or hybrid structure, the bank or mortgage company doesn’t sue you to get your house. You may in fact may end up suing the mortgage company.
Foreclosures are usually non-judicial in the following states: Alabama, Alaska, Arizona, Arkansas, California (mostly), Colorado, District of Columbia (sometimes), Georgia, Idaho, Maryland, Massachusetts, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico (sometimes), North Carolina, Oklahoma (unless the homeowner requests a judicial foreclosure), Oregon, Rhode Island, South Dakota (unless the homeowner requests a judicial foreclosure), Tennessee, Texas, Utah, Virginia, Washington, West Virginia, and Wyoming.
Judicial Foreclosures Close Up
In a judicial foreclosure process, the mortgage company has to sue you in court to get your house.
- Notices. In most cases, judicial foreclosure proceedings require 120 days of delinquency on a loan before an official process begins. During this time, the lender is required to send letters and notices telling you that you’re behind in your mortgage and what to do about it. You can stave off foreclosure by attempting a loss mitigation, loan modification, short sale, deed in lieu, etc.
- Complaint. If you are delinquent on your mortgage for a certain period of time and you do nothing about it, the lender plunks down hundreds of dollars to the court clerk to file a complaint, or petition for foreclosure, against you in state court. The attorneys for the mortgage company will attach necessary documents to the complaint to support the case.
- Service of Summons. As in any other court case, you will be served with the complaint and summons. The summons lists your rights and states the amount of time you have before you need to file a response to the court.
- Response. To save your home, you must respond to the complaint by the date on the summons. In most states, that’s 20 to 30 days. A response can be a motion for extension of time, a motion to dismiss, an answer and affirmative defenses, a counterclaim, and so on.
- Litigation, Judgment, and or Settlement. If you respond properly and file the right documents at the right time, you may be able to save your home, settle or simply buy time to look for another place. If you don’t respond, the lender can get a default judgment authorizing the sale of your home.
Non-Judicial Foreclosures Close Up
In a non-judicial foreclosure process, the mortgage company simply files documents and waits for you to challenge the foreclosure.
- Notices. In every situation, the lender is required to send letters and notices telling you that you’re behind in your mortgage and what to do about it, including loan modification.
- Breach Letter.Typically there is a 120 day mandatory period between a homeowners default and any foreclosure action by the lender. During this time, the homeowner may get a letter warning them that foreclosure proceedings will commence if they don’t make missed payments and interest. This is also called a lien letter.
- Notice of Default or Pre-foreclosure Notice. This is the formal start of foreclosure. You will receive a notice of default first. In some states, it may also be called a notice of default and sale. The notice typically gives you information about how to reinstate your loan (or cure the default) and or an auction date in which you must pay on the house or lose it to a third party.
- Hearing Date. This is part of the Notice of default. There is a date provided on the notice with a time and location for the sale of your property to the highest bidder. In some states, the notice may also contain a foreclosure hearing date.
- Foreclosure Sale. If you’re not proactive and fail to properly respond to the notice of default, your home will be sold at an auction by a trustee.
- Litigation, Judgment, and or Settlement. If you’re proactive and can get to a judicial process, you may be able to save your home, settle or simply buy time to look for another place.
Judicial Foreclosure Scenario
CJ lives in Florida and has not paid his mortgage for the past 4 months. To begin foreclosure proceedings, the mortgage company went to the courthouse and filed a complaint along with other documents, including a lis pendens, a copy of the mortgage documents, and an assignment of mortgage.
CJ Fights Back
CJ was served with the summons and complaint for a judicial foreclosure four days after the mortgage company filed it. He does the following to keep his home:
- He responds within 20 days with a motion for extension of time.
- Two days before the 30 day extension of time runs out, CJ responds to the complaint with a motion to dismiss, claiming that the mortgage company failed to state a cause of action because its allegation that it owned the right to foreclose was not true. Specifically, CJ claimed that the assignment of mortgage was not an original but a copy signed by a robo-signer.
- Once he responds, CJ begins discovery, which can last for months or even years.
- CJ can keep the balls in the air for a while. During this time, he can look for another house, seek a deed in lieu, attempt to modify, settle, etc.
Judicial Foreclosure Scenario
Terri lives in North Carolina. With the loss of her job, she has had a spotty record of paying on her mortgage. All of a sudden, she begins to receive notices from her mortgage company.
Terri Fights Back
Terri believes that the mortgage company did not properly record payments she made on her mortgage. She felt that was grounds for opposing the foreclosure. She does the following to keep her home:
- Terri gets a pre-foreclosure notice that contains information about her loan, default, interest charges, and fees she must pay to bring the loan up to date.
- Then, she gets a Notice of Foreclosure Hearing. It includes a time and location of a foreclosure hearing in 15 days.
- Terri first opts to delay the case. She moves for continuance of the hearing date. As support, she presents recent mortgage payments and convinces the clerk that she’s trying to resolve the default and prevent foreclosure.
- In a written order, the clerk issues Terri a 60-day continuance along with the new hearing date.
- Sixty days later, Terri shows the clerk that she paid on her mortgage and attempted to modify the loan. As evidence, she presents email and payment receipts. She also has proof that the bank did not follow foreclosure guidelines. In short, she asserts that the debt was not valid.
- Based on Terri’s information and statements, the clerk denies the mortgage company a foreclosure. In North Carolina the company is barred from a non-judicial foreclosure process.
- Terri celebrates her victory, sharpens her knives, and gets ready because she knows the mortgage company will be back. However, the mortgage company can no longer sue her through a non-judicial proceeding. They must sue her in a real judicial proceeding.
- While the case is in limbo, Terri considers other options, like bankruptcy, working out a modification or deed in lieu. Any way, she wins.
The Last Word
There must be a formal process for turning over a home from a borrower to a lender. Though foreclosures in non-judicial states may be more difficult for self-represented litigants, you can have your day in court no matter where you live. Your job is to figure out what the process is in your state and throw a monkey wrench into it.
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