Judicial/ Non-Judicial Foreclosure: Only Judicial foreclosure
Right of Redemption / Deficiency Judgment: Not Available/ Not Available
Timeline: 150 Days, Can vary depending on individual cases
Deed of Trust / Mortgage as Security Instruments: Mortgage
Judicial Foreclosure Process:
In the Judicial Foreclosure process, the lender needs to file a case against borrower in a court which has jurisdiction over the mortgaged property. The lender would request the court to issue a decree of sale against the mortgage property after having established that the borrower has defaulted on the loan amount. The court gives some time for the borrower to pay up the dues along with interest charges, but if the borrower does not pay the said amount the court will issue an order authorizing the foreclosure proceedings.
The notice of the sale should be posted on the courthouse as well as two more public locations in the county to which the property belongs to. In addition to this, an advertisement needs to be carried on in a local newspaper containing the notice of the sale and other details pertaining to the property. This advertisement needs to be carried on at least twice in two weekly editions. The first ad should be issued at least 4 weeks prior to the actual sale date. The second ad should be issued sometime later but before the actual date of sale.
The notice of the sale should be issued to the borrower as well, at least 20 days before the actual date of sale if they are occupying the said premises.
The date and time for the sale should be mentioned in the notice. Generally, the sale proceedings are carried on between 9:00 AM and 4:00 PM on business days.
A sealed written bid for the property needs to be submitted to the sheriff by all the participants wishing to buy the property, prior to the public auction. Some times, these sealed bids should also include the fees that is to be incurred by the successful buyer after the sale. This fees is returned to all the unsuccessful bidders. The sheriff will open all the sealed bids and announce the value offered by each participant, before everyone on the date of the public auction.
The sale proceedings can be postponed, if so wished. If the sale is postponed for more than three days, a new notice for the sale must be made and details of the same must be announced at the previous sale/auction venue.
Alternative Non-Judicial Foreclosure process:
There is an alternative non-judicial foreclosure process that the borrower may choose to follow, if they wish. In this method, the borrower voluntarily transfers their rights in the property to the lender and the lender gets complete access to the property.
In this procedure, the lender and the borrower should jointly sign a declaration at the recording office stating that they have chosen to proceed with the alternative non-judicial foreclosure process.
There is a declaration of ‘disclosure of notice and cancellation’ which needs to be signed by the borrower which conveys that they are giving up their claim to the property and they will not re-claim or occupy the property henceforth.
But if this method is followed, the lender cannot file a deficiency judgment against the borrower, in case the total value of the property (when sold) is less than the amount owed by the borrower in the first place.