Foreclosure Law

Two Types of Foreclosure Law - Two Sets of Rights

Foreclosure Law

Legislation concerning property ownership varies from State to State, and that applies to Foreclosure Law as well. Individual State foreclosure laws provide for one of two routes for lenders to obtain relief, namely Judicial and Non-Judicial Foreclosure. This, in turn, depends on the method that the lender used to secure the collateral for the loan. Where the loan involves a Deed of Trust then banks may choose to follow the cheaper Non-Judicial route. Where a mortgage is required, the lender must follow the more expensive and longer Judicial Foreclosure route. A consumer should find out which State law applies to them before they sign, and especially before they file for bankruptcy.

The following is a broad-based summary of how these two foreclosure procedures work in principle, and may not be correct in all detail from a particular State.

  • Judicial Foreclosures
    Where a mortgage loan applies, a bank is legally required to take their complaint to Court. However, they may not move forward with foreclosures until they have explored refinance, debt consolidation, short sales and mortgage modification options with the borrower. Following a letter of advice and a specified waiting time, the Court then hears the case and reaches a decision. There are two important things to note here. The first is that an undefended action usually goes in the complainant's favor. The second is that a Court decision concerning foreclosures on mortgage loans often carries with it right of appeal.
  • Non-Judicial
    Foreclosures proceed without Court intervention because the Deed of Trust already allows banks to foreclose and create another reo home. This swifter process involves just a Notice of Default and a Notice of Sale before the property is sold. Consumers participating in this procedure are advised to consult a bankruptcy law firm as urgently as possible unless they can negotiate a solution directly with their lenders. This is an important step to consider very carefully because foreclosures done this way are irreversible in some States.

Our website is full of valuable information like this that helps you find out how to stop foreclosure. Knowledge of foreclosure law like this could put you in a better position to avoid the repossession of your property when you no longer can afford to make a payment.




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