Types of Foreclosure

There are two common types of foreclosure used in the United States: Judicial Foreclosure and Non-Judicial Foreclosure.

Judicial Foreclosure

Judicial foreclosure is allowed in all states, and occurs when the lender files a civil lawsuit against the borrower, with the entire process being handled by the court. Judicial foreclosures can be further divided into two types: foreclosure by sale, and strict foreclosure. Foreclosure by sale requires the home to be auctioned to the highest bidder with the lender placing the first, or opening, bid. These auctions are commonly referred to as sheriff sales. In a strict foreclosure, the court sets a date by which the owner must pay the mortgage, and if the owner fails to pay, the court awards ownership of the home to the lender with no auction taking place.

The judicial foreclosure process begins when the lender files their lawsuit, at which time they also file a lis pendens (LIS) on the property. The lis pendens is a document recorded with the County Recorder's office, to let potential buyers, lenders, and others know of the pending foreclosure lawsuit. A second notice, the Notice of Foreclosure Sale (NFS), is typically filed once the court has set the auction time and bid amount.

Non-judicial Foreclosure

The non-judicial foreclosure process allows a lender to advertise and sell the property at a public auction, without court involvement, by following a process specified by the state. As the process is laid out in state laws, or statutes, the non-judicial foreclosure process is sometimes also referred to as Statutory Foreclosure. A key requirement for non-judicial foreclosure is that the borrower agreed to the process when they took the loan. To accomplish this, a power of sale clause is added to the mortgage, or deed of trust, which gives a third-party trustee the right to sell the property in the event the borrower does not make their payments. Given this clause, non-judicial foreclosures are sometimes referred to as foreclosure by power of sale.

In most non-judicial foreclosure states, the foreclosure process is started when the lender files a Notice of Default with the County Recorder's office, putting the homeowner and anyone else who is interested on notice that the loan may be foreclosed on. A second notice, the Notice of Trustee Sale is typically filed 30 to 120 days later, depending on the state; and sets the auction date and time. In a few states, only the Notice of Trustee Sale is recorded.

Important Notes

There are two important things to keep in mind about both foreclosure processes:

1. Foreclosures happen to loans, not properties. As such, it is quite possible to have more than one active foreclosure on a single property at the same time. More importantly, buying a foreclosure at a state mandated auction doesn't necessarily mean that you have purchased the property free and clear of other liens. For example, the buyer of a foreclosure is almost always responsible for any past due property taxes.
2. Foreclosure laws vary a great deal by State. One should never assume that anything they learn about the foreclosure laws of one state will apply to another.

State	Foreclosure Type	Number of Months	Deficiency Judgment	Redemption Period
Alabama	Nonjudicial	1	Allowed	12 months
Alaska	Nonjudicial	3	Allowed	None
Arizona	Nonjudicial	3	Allowed	None
Arkansas	Judicial	4	Allowed	None
California	Nonjudicial	4	Prohibited	None
Colorado	Nonjudicial	2	Allowed	75 Days
Connecticut	Strict	5	Allowed	None
Delaware	Judicial	3	Allowed	None
Dist. of Col.	Nonjudicial	2	Allowed	None
Florida	Judicial	5	Allowed	None
Georgia	Nonjudicial	2	Allowed	None
Hawaii	Nonjudicial	3	Allowed	None
Idaho	Nonjudicial	5	Allowed	None
Illinois	Judicial	7	Allowed	None
Indiana	Judicial	5	Allowed	3 months
Iowa	Judicial	5	Allowed	6 months
Kansas	Judicial	4	Allowed	6-12 months
Kentucky	Judicial	6	Allowed	None
Louisiana	Exec.Process	2	Allowed	None
Maine	Judicial	6	Allowed	None
Maryland	Nonjudicial	2	Allowed	None
Massachusetts	Judicial	3	Allowed	None
Michigan	Nonjudicial	2	Allowed	6 months
Minnesota	Nonjudicial	2	Prohibited	6 months
Mississippi	Nonjudicial	2	Prohibited	None
Missouri	Nonjudicial	2	Allowed	None
Montana	Nonjudicial	5	Prohibited	None
Nebraska	Judicial	5	Allowed	None
Nevada	Nonjudicial	4	Allowed	None
New Hampshiree	Nonjudicial	2	Allowed	None
New Jersey	Judicial	3	Allowed	10 Days
New Mexico	Judicial	4	Allowed	None
New York	Judicial	4	Allowed	None
North Carolina	Nonjudicial	2	Allowed	None
North Dakota	Judicial	3	Prohibited	60 days
Ohio	Judicial	5	Allowed	None
Oklahoma	Judicial	4	Allowed	None
Oregon	Nonjudicial	5	Allowed	None
Pennsylvania	Judicial	3	Allowed	None
Rhode Island	Nonjudicial	2	Allowed	None
South Carolina	Judicial	6	Allowed	None
South Dakota	Judicial	3	Allowed	180 days
Tennessee	Nonjudicial	2	Allowed	None
Texas	Nonjudicial	2	Allowed	None
Utah	Nonjudicial	4	Allowed	None
Vermont	Judicial	7	Allowed	None
Virginia	Nonjudicial	2	Allowed	None
Washington	Nonjudicial	4	Allowed	None
West Virginia	Nonjudicial	2	Prohibited	None
Wisconsin	Judicial	Varies	Allowed	None
Wyoming	Nonjudicial	2	Allowed	3 months