Judicial/ Non-Judicial Foreclosure: Judicial & Non-Judicial Foreclosure
Right of Redemption / Deficiency Judgment: Yes / Yes
Timeline: 120 Days, Can vary 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 the Deed of Trust / Mortgage documents, the Judicial foreclosure process can be used. The Judicial foreclosure process involves the lender filing a lawsuit against the borrower in case the later happens to default on their mortgage payments. The court verifies the same and authorizes the foreclosure sale through a court order after which the property is sold off to the highest bidder through a public auction.
Non-Judicial Foreclosure process:
If a power of sale clause is present in the Deed of Trust/ Mortgage documents, the Non-Judicial foreclosure process can be followed. The power of sale clause authorizes the lender or their authorized representative (referred to as the Trustee) to carry out the foreclosure proceedings in case the borrower happens to default on their mortgage loan. The following guidelines may be followed for the same.
If the power of sale document mentions the time, place and other foreclosure sale terms, the same can be followed. Otherwise, the following process is followed.
At least thirty days before the foreclosure sale, a notice of foreclosure needs to be prepared and sent by regular mail to the office of the attorney of record of the borrower. This notice also needs to be sent to the borrower in their last known address using both the regular mail and also registered post (receipt acknowledgement requested).
This notice needs to be pasted on two public places in the county, one of which must be the front door of the courthouse of the county to which the property belongs to, at least four weeks before the foreclosure sale. The sheriff is required to advertise the property for sale in a news paper or legal magazine that is in circulation in the county for four consecutive weeks (at least once, each week).
This notice should contain all the details of the borrower, lender, their correspondence address, phone numbers, property location and other details, recording information, borrower’s right of redemption, foreclosure sale date, time, venue, foreclosure sale terms, etc.
The borrower can pay up all their dues including interest/ other costs to reclaim their property and stop the foreclosure sale. But this should be done before eleven days of the foreclosure sale date.
The foreclosure sale is conducted in the front door of the courthouse on any Friday between 9:00 AM to 4:00 PM. If the Friday on any week happens to be a public holiday, the sale is held on the next business day.
The sale can be held only after 190 days of the first default by the borrower. During the foreclosure sale, the property is auctioned off to the highest bidder, who receives a certificate of sale immediately afterwards.
The sheriff can postpone the sale for up to one week from the scheduled foreclosure sale date by posting an adjournment to the notice already posted.
There is no provision for a deficiency judgment, if the Non-Judicial foreclosure process is used. The lenders can file for deficiency judgment if the Judicial foreclosure method was used.
The borrower can reclaim their property by paying up the amount offered by the highest bidder (along with interest charges / other costs) for up to eight months after the foreclosure sale has been completed. But the right of redemption for the borrower cannot be claimed if it is precluded, as it can be in certain cases.