Judicial/ Non-Judicial Foreclosure: Both Judicial and Non-Judicial Foreclosure
Right of Redemption / Deficiency Judgment: Depends/ Depends
Timeline: 90 Days, Varies depending on individual cases
Deed of Trust / Mortgage as Security Instruments: Deed of Trust, Mortgage
Judicial Foreclosure process:
If a power of sale clause is not present in Deed of Trust or Mortgage documents, the Judicial Foreclosure process is followed. In this method, the lender needs to file a lawsuit against the borrower in case the latter happens to default on their mortgage loan. The court verifies the same and if the default is confirmed, it proceeds to give a foreclosure order which authorizes the foreclosure process which involves selling of the mortgaged property to the highest bidder through a public auction.
Non-Judicial Foreclosure process:
The Non-Judicial foreclosure process is followed when a power of sale clause is present in the Deed of Trust/ Mortgage documents. The power of sale clause authorizes the lender or their representative (known as Trustee) to conduct the foreclosure sale of the mortgaged property, in case the borrower happens to default on their payments. The following guidelines may 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. If not, the following procedures are followed.
A foreclosure notice needs to be prepared containing all the details of the borrower, lender, loan amount, default, property details, foreclosure sale date, time, location and other terms of the foreclosure sale.
This notice needs to be sent to the borrower and any other person who is associated with the mortgaged property before twenty-one days of the actual foreclosure sale date.
This notice should also be advertised in a local newspaper present in the county where the property is located for four consecutive weeks (at least for one day per week).
The foreclosure sale is conducted by the sheriff of the county or their deputy. The foreclosure sale is normally held on business days from 9:00 AM to 5:00 PM and the property is sold to the highest bidder through a public auction.
Anyone (including the lender) can bid for the property in the public auction. The foreclosure sale can be postponed by the lender, if they so desire. In such cases, a notice regarding their postponement needs to be published in the same newspaper that carried the initial foreclosure notice. This ad needs to be continuously published (as stated previously) till the new foreclosure sale date.
Generally, borrower can exercise their right of redemption by paying up all their dues within one year after the property was sold in the above method, unless there has been a specific clause for a shorter period of redemption explicitly mentioned in the document.
But, the right of redemption is applicable for one hundred and eighty days if a power of sale clause is present in the mortgage/ deed of trust documents and the property contains less than 40 acres of land. In case the property is abandoned, the time-period for redeeming the same, is restricted to 60 days.