Foreclosure type refers to the type of foreclosure, a mortgage company or bank can take after they have taken possession of your home. There are three types of foreclosure that are available to you, judicial foreclosure, non-judicial foreclosure by entry and possession. Most counties in the US have judicial foreclosures. Your county clerk should be able to help you go through the county's foreclosure process.
judicial foreclosure type involves a court order to terminate the lease agreement between you and your mortgage holder. The bank must go to court and get a judge to stop your lease. Once your lease is terminated, your house is taken without any legal claims. The bank will try to sell the house at auction in an attempt to recoup the cost of the loan. It is important to note that in this case you are still responsible for your mortgage payments. It is also possible that you could lose your home to foreclosure because the bank will not let you transfer your balance due from another property.
Non-judicial foreclosure type occurs without a court order and is used when a property owner does not want to sell their property and does not have the financial means to do so. In this case, the mortgage holder has the right to take your property by force if you do not leave. They can do this through a series of actions including posting a bond, filing court documents or filing bankruptcy. In this instance, you do not lose your property to foreclosure because you do not have to pay off the debt.
Bankruptcy foreclosure occurs when the court declares that a property is unable to meet its mortgage payments and the owner is at least two months behind on the payments. If the owner files for bankruptcy, they lose all of their legal rights to the property and are at the mercy of the mortgage holder to either sell the property at auction or to repay the debt. This is the most extreme foreclosure scenario and is considered a last resort.
An auction sale is the only instance when a foreclosure auction occurs. The mortgage holder has the right to sell the property to the highest bidder in an auction. The person who pays the highest price gets the deed to the property. This is the second highest foreclosure type.
The third type of foreclosure is judicial foreclosure. A mortgage holder can use a home loan enforcement action to prevent you from exercising any rights to the redemption period or to prevent you from exercising any right to lower the arrears in your mortgage. A court may issue an order referred to as an injunction which prohibits you from coming into further contact with the property. The mortgage holder can also use a civil suit to apply to the court to recover any late fees and costs that it has lost.
The fourth foreclosure type is non-judicial foreclosure. This is one of the most uncommon types of foreclosure. The homeowner in this instance has not been formally given a judgment of foreclosure. This means there is not a lawsuit or judgment in which the mortgage holder can use to regain possession of the property. The owner can still try to sell the house for a price higher than what they owe on the mortgage. If the owner fails to make this payment, the mortgage holder has no other recourse but to pursue foreclosure.
When a homeowner in this foreclosure type forgets or delays paying his or her mortgage payments, the foreclosure process moves forward quickly. The first step is for the lender to serve a legal notice of default. This notice tells the borrower that the lender has the right to sell the property if the payments continue to be late. If the payments are still late after the notice of default has been received, then the lender will move to have the home auctioned. At that point, a local judge will issue a foreclosure order and the process begins.