Every state has its own laws and procedures to process foreclosures. Six countries use just non-judicial foreclosures, 20 use judicial foreclosures only; while 25 states, including California, use both judicial and non-judicial foreclosures. The most important difference between a non-judicial foreclosure and a judicial one is judicial foreclosures begin at a court of lawenforcement. Non-judicial foreclosures begin with submitting a notice of default with the county recorder's office. Non-judicial foreclosures are quicker to process, but do not allow lenders to file for a lack of judgment. Deficiency judgments are lawsuits lenders document in juvenile foreclosures to demand payment from the borrower to the difference between the mortgage balance and the foreclosure sale price of a house.
Notice of Default
Non-judicial foreclosures can begin after the borrower misses one monthly payment. The lender needs to warn the homeowner 30 days ahead of time before starting a foreclosure. The foreclosure procedure starts with the lender filing a notice of default with the county recorder when a borrower does not make a mortgage payment. The notice must detail the amount the borrower owes and by when it has to be compensated. The notice must be transmitted to the borrower and all impacted parties.
Notice of Sale
Three months after the notice of default is registered the lender may schedule a foreclosure deal. At least 20 days before the foreclosure sale the lender must send the borrower a notice of sale that contains the date, time and location of the foreclosure sale, the property's address and the trustee's title. A trustee is the individual in charge of calculating the non-judicial foreclosure. A copy of the notice of sale must be posted on the property and at a minumum of one public place in the county at least 20 days before the sale.
Foreclosure or Trustee's Sale
The property is offered by public auction and goes to the maximum bidder. The trustee may demand bidders pay the full bid amount in cash or by cashier's check. The sale can be postponed, but the new date has to be announced at the auction. If the sale is postponed more than three times a fresh notice of sale must be filed.
Once the sale is made in the auction the winning bidder receives ownership of the property. In certain countries, like Alabama, the borrower has a redemption period to cover the foreclosure sale price and maintain the property. Other states, such as California, do not have a redemption period and the auction sale is final.