Foreclosure Process

  • Judicial
    • Lender tries to workout loan with borrower
    • Complaint action is filed and served on the borrowers
    • Default judgement may be entered if not contested and Writ to sheriff
    • Sheriff advertises and sells property at auction to highest bidder
    • Redemption rights start
    • Sheriff issues Writ of Possession and removes owner from property
    • Tenants have until the expiration of their lease
    • Jr lein right of redemption expires
    • Owners right to redeem expires
    • Deed issued when redemption rights end

  • Non-Judicial
    • Lender tries to workout a deal with borrower
    • Official doc letting borrower know foreclosure is starting
    • Sale date is set
    • Trustee sells to highest bidder at auction
    • Owner has 10 days to vacate the property
    • Tenants have until the expiration of their bonafide lease
Key differences between two processes
  • Judicial
    • The process is long, sometimes more than 1 year
    • Requires a lawsuit against the homeowner, a judgement is granted to the bank and the execution of the sale is managed by the county sheriff
    • Jr. Leins are entitled to a 60 day Right of Redemption. The homeowner is entitled to 6 months. During this period entitled parties have the "right" to pay off the winning bidder and "redeem" their interest in the property
    • Title is not vested until the Sheriff issues his deed. This is not allowed until all rights to redeem are extinguished
    • Homeowner must vacate immediately upon the sheriff issuing a Writ of Possession
    • Legal process, extremely complicated, less competitive

  • Non-Judicial
    • The entire process takes approximately 180 days
    • Process is managed by a trustee
    • Sale is absolute, homeowner and Jr. Lein interests (excluding IRS) are wiped
    • Title is immediately vested to the highest bidder
    • Homeowner has 10 days to vacate the residence
    • Less complicated, more competitive
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