Judicial Foreclosure This is the most common type of foreclosure. It's allowed in all states and in some states it's mandatory. It involves the sale of mortgaged property on which the borrower has breached its loan repayment obligations. The sale is carried out under judicial supervision.
A foreclosure is the legal process in which the lender attempts to recover the balance of a loan by forcing the sale of the property used as security for the loan. Foreclosure occurs when the homeowner is unable to make mortgage payments to the lender. The homeowner has a few options to avoid foreclosure. The most common are mortgage modifications and short selling.
The other more common type is the procedure known simply as “foreclosure” or “judicial foreclosure”. Here the property is subject to auction by a county or court official. The successful bidder receives a property deed. Banks and other lenders usually bid on the property for the amount of the debt owed and, if no other buyer shows up, they will receive the title to the property.
Across the country, the most common types of foreclosure are judicial and non-judicial. But there's also a different type of foreclosure called strict foreclosure. In a strict foreclosure, the executing party (the lender) goes to court to seek an order declaring them in default on the mortgage and allowing them to foreclose the mortgage. If the court agrees that you are in default, it will approve the foreclosure and give the title to your home directly to the lender.
A foreclosure sale doesn't happen like a judicial or non-judicial foreclosure. Other states employ another type of foreclosure, called “non-judicial” or “legal” foreclosure. Depending on the state, foreclosure will follow a different schedule and will be classified into different types. With each of the three types of foreclosure, practices differ in terms of how the lender handles default, eviction and, ultimately, the recovery of your property if you don't pay your home loan.
Only two states, Connecticut and Vermont, allow a special type of judicial foreclosure known as strict foreclosure. Jurisdictions across the country practice three types of foreclosure, and the procedures that apply to your circumstances depend in part on state and local laws and, in part, on the wording of your mortgage loan agreement.