Judicial/ Non-Judicial Foreclosure: Both are Available
Right of Redemption / Deficiency Judgment: Yes / Yes
Timeline: 180 Days, Can vary depending on individual cases
Deed of Trust / Mortgage as Security Instruments: Deed of Trust, Mortgage
Judicial Foreclosure process:
The Judicial foreclosure process is followed if a power of sale clause is not present in either the Deed of Trust or the Mortgage document. In this method, the lender needs to file a lawsuit against the borrower in the event of their default. The court verifies the same and issues an order authorizing the foreclosure sale, during which, the property is sold off to the highest bidder through a public auction.
With the Judicial foreclosure process, the borrower can exercise their right of redemption for a period of up to 180 days from the date of the foreclosure sale, to re-claim their property by paying up all their dues along with interest costs, foreclosure costs and the cost incurred by the buyer to maintain the property during the intervening period. The borrower needs to file a notice of 2-30 days with the sheriff before they can reclaim their property.
Non-Judicial Foreclosure process:
If a power of sale clause is present in either the Deed of Trust or Mortgage documents, the Non-Judicial foreclosure process can be followed. The power of sale authorizes the lender or their authorized representative (referred to as Trustee) to conduct the foreclosure sale, in case the borrower happens to default on their Mortgage payments. The following guidelines can be followed for the same.
If the power of sale clause mentions the location, time and other terms of the foreclosure sale, the same can be followed. Otherwise, the following procedure is followed.
A notice of default is recorded at the recorder’s office in the county where the mortgage property is located and this notice is sent to the borrower & the occupant of the property, at least 120 days before the date of the scheduled foreclosure sale.
This notice needs to be advertised in a local newspaper located in the county on at least one day for four successive weeks. The last ad should be carried at least twenty days before the actual date of the foreclosure sale.
The notice should contain all the details regarding the lender / borrower, their correspondence details, property location and other details regarding the same, details of the loan, amount of default, lenders intention to foreclose the loan, recorder’s information on the trust deed, the date, time and venue of the foreclosure sale, etc.
The borrower still has time (until the foreclosure sale) to pay up all their dues (along with interest costs) to reclaim their property. The foreclosure sale is conducted between 9:00 AM to 4:00 PM at the location mentioned in the notice and the property is sold off to the highest bidder through a public auction. Anyone can bid at the auction, except the lender.
The foreclosure sale can be postponed for up to 180 days by giving a notice at least twenty days in advance, to all the parties involved in the foreclosure sale. The lender cannot file for a deficiency judgment through the Non-Judicial foreclosure process.