The Three Types of Foreclosure: Judicial Foreclosure. Default occurs when a borrower has not made at least one mortgage payment, although the technical definition may vary depending on the lender. After you skip the first payment, the lender will contact you by letter or phone. A notice of default (NOD) is sent after the fourth month of late payments (90 days late).
This public notice gives the borrower 30 days to correct late payments before formally starting the foreclosure process. Most lenders won't send a default notice until the borrower is due 90 days (three consecutive late payments). Therefore, many times a borrower can be delayed for a month or two without facing foreclosure. Once the forms are filed in court or the necessary approval is obtained, the lender's lawyer or foreclosure administrator will schedule the sale of the property.
Then, a notice of sale from the trustee (also known as a notice of sale) is registered in the county where the property is located, indicating the specific time and place of the sale, as well as the minimum initial offer of the property. Pre-foreclosure is the period before the start of the foreclosure process. This occurs when payments have been delayed and the lender issues a notice of default (NOD). Before learning more about the differences between a non-judicial foreclosure and a judicial foreclosure, it may be helpful to first understand what the term “foreclosure” means.
Basically, foreclosure is a legal process in which a lender (for example, some states require or allow the use of a dead trust as a way to protect the lender of money for a property, rather than a mortgage). In this case, often referred to as non-judicial foreclosure (also known as statutory foreclosure), the title is held by a third party, the trustee. The trust deed has a power of sale clause, which allows the sale of the property without going to court in the event of default. Statutory foreclosure is carried out in accordance with state law and the property purchase contract.
Usually, if the borrower fails to comply with payments, the lender notifies the trustee of the default. The trustee may need to file a notice of default with the county recorder's office as a way to alert the public about the impending auction. The auction is also announced in local media, indicating, among other things, the total amount owed by the property. After the property is sold, a foreclosure affidavit may need to be filed.
The lender will generally submit an offer equal to the amount owed on the loan plus the foreclosure costs to ensure that its cost is covered by a better one; otherwise, the lender will receive legal ownership of the property. In some states, a lender can obtain title to a mortgage property without any sale through strict foreclosure. When the borrower fails to make payments, the lender asks the court to order the borrower to repay the loan. The court sets a specific date by which the borrower must comply.
If the borrower fails to pay, the court simply grants full legal title to the property to the lender. To prevent zombies, several political efforts have been made in states with judicial foreclosure to limit the repayment period, or even eliminate it, because homeowners rarely exchange the property, so the property can remain empty for months or years until the lender finally sells it. Zombie foreclosures, or zombies, are properties in the process of foreclosure, but have not been seized by the lender. Although homeowners are required to maintain the property and pay taxes until the sale, they rarely do so.
As a result, properties deteriorate due to lack of maintenance and, when they are boarded up or show other signs of being empty, they cause more destruction of properties due to acts of vandalism. Neglected properties or destroyed properties also reduce the value of the neighborhood. .
