The Mortgage Foreclosure Process: What to Expect

Foreclosure Laws Differ Among States

Foreclosure laws vary from state to state. All states allow foreclosures by judicial sale, and some even require judicial foreclosures. These judicial foreclosure states necessitate court supervision for the property sale after the borrower defaults.

Many states allow the lender to foreclose without legal action. These statutory nonjudicial foreclosures are sometimes called foreclosure by advertisement, power by sale foreclosures, or trustee sales.

In either judicial or nonjudicial foreclosures, an official sells the property at an auction after the mortgagee meets the procedural requirements.

A limited number of states allow “strict foreclosures”. A court calculates the amount the borrower owes and gives the borrower a deadline to pay that amount. If the borrower does not pay by the deadline, the mortgagor gets the property without an auction.

Figure 1: Types of Foreclosure Procedures by State and Estimated Timeframe from First Missed Payment to Lender Receiving Title to Property

Alabama	Power of Sale	300 Days
Alaska	Trustee Sale	360 Days
	Judicial w/ Redemption	750 Days
Arizona	Trustee Sale	330 Days
	Judicial	510 Days
Arkansas	Power of Sale	360 Days
California	Trustee Sale	360 Days
	Judicial w/ Redemption	960 Days
Colorado	Trustee Sale w/Redemption	405 Days
Connecticut	Strict Foreclosure	420 Days
	Power of Sale	480 Days
Delaware	Judicial	450 Days
District of Columbia	Trustee Sale	300 Days
Florida	Judicial	450 Days
Georgia	Power of Sale	300 Days
Hawaii	Judicial	450 Days
Idaho	Trustee Sale	420 Days
	Judicial w/Redemption	600 Days
Illinois	Judicial w/Redemption	510 Days
	Judicial w/Redemption-Deficiency	540 Days
	Judicial w/Redemption-Abandonment	450 Days
Indiana	Judicial w/Redemption	480 Days
Iowa	Non-Judicial	360 Days
	Judicial w/o Deficiency	540 Days
	Judicial w/o Deficiency (Non-Owner-Occupied)	420 Days
	Judicial w/Deficiency	720 Days
Kansas	Judicial w/Redemption	510 Days
Kentucky	Judicial	420 Days
Louisiana	Judicial	420 Days
Maine	Judicial w/Redemption	570 Days
Maryland	Trustee Sale w/Redemption	345 Days
Massachusetts	Trustee Sale	450 Days
Michigan	Power of Sale w/Redemption	510 Days
	Power of Sale-Abandonment	360 Days
Minnesota	Power of Sale/Redemption	510 Days
	Judicial w/Deficiency	720 Days
Mississippi	Trustee Sale	300 Days
Missouri	Trustee Sale	300 Days
Montana	Power of Sale	360 Days
	Judicial w/Redemption	720 Days
Nebraska	Trustee Sale	330 Days
	Judicial	450 Days
Nevada	Trustee Sale	360 Days
	Judicial w/Redemption	720 Days
New Hampshire	Power of Sale	300 Days
New Jersey	Judicial w/o Deficiency	540 Days
	Judicial w/Deficiency	720 Days
New Mexico	Judicial w/Redemption	420 Days
New York	Judicial	540 Days
North Carolina	Trustee Sale	300 Days
North Dakota	Judicial w/Redemption	420 Days
Ohio	Judicial w/Confirmation	510 Days
Oklahoma	Judicial	420 Days
Oregon	Trustee Sale	390 Days
Pennsylvania	Judicial	450 Days
Rhode Island	Power of Sale	300 Days
South Carolina	Judicial w/o Deficiency	390 Days
	Judicial w/Deficiency	420 Days
South Dakota	Judicial w/Redemption	540 Days
Tennessee	Trustee Sale	300 Days
Texas	Power of Sale	280 Days
Utah	Trustee Sale	390 Days
	Judicial w/Redemption	570 Days
Vermont	Judicial w/Redemption	480 Days
Virginia	Trustee Sale	300 Days
Washington	Trustee Sale	390 Days
	Judicial w/Deficiency	750 Days
West Virginia	Trustee Sale	300 Days
Wisconsin	Judicial w/o Deficiency	510 Days
	Judicial w/Deficiency	690 Days
Wyoming	Power of Sale w/Redemption	465 Days

Source of data:“MGIC FlexClaim Simplified State Time Frames”

Acceleration of the Mortgage Debt

Despite the differences among the processes, most foreclosures follow a basic outline. First, the lender must give you written notice of any defaults, and some time to cure them. This notice is a prerequisite to the next step, which is acceleration. Accelerating the debt is calling the note due and demanding payment of the entire balance. You pay your mortgage in installments. If the lender did not accelerate the debt, it would be difficult for the mortgage holder to recover more than any payments that were due by the foreclosure date. Acceleration permits the lender to declare the whole balance due and demand payment. Your note and mortgage will spell out the conditions under which the mortgagor can accelerate the debt and foreclose. The mortgagor must comply with those requirements.

Judicial Foreclosure or Power of Sale

After the lender gives notice and accelerates the debt, the lender will take the legal steps required to recover the property. The best time to try to work something out with the lender is when the notice of default arrives, or even before that occurs. That is why it is important to open and read all of the notices and letters the lender sends. If you ignore them, you miss out on an opportunity to avoid foreclosure.

If the lender is proceeding under a power of sale, the mortgage holder is usually required to post a notice, often at the property site, and advertise the sale. In a judicial foreclosure, the lender files a lawsuit and must serve the borrower with a summons and complaint. After the lender serves the complaint, the borrower has a time period in which to respond to the complaint, but with very limited available defenses. You cannot avoid foreclosure by explaining to the court why you were unable to make your payments. The only real defenses are that you really did pay, or that the debt is invalid. At this point, the matter is in the hands of an attorney, and you will need to contact the lawyer to work out a settlement.

Foreclosure Auction

In almost all types of foreclosures, the next step is to schedule the auction. The sheriff or court official usually conducts the auction. In most cases, the lender bids on the property and acquires title for itself. If the sale price is less than the mortgage balance, the difference is called a deficiency. The lender can sometimes get a judgment against the borrower for the deficiency, but rarely makes the attempt.

The Redemption Period

Some states have a redemption period during which the borrower can regain title to the property by paying the purchase price plus costs and interest to the person who acquired the property at the auction. In states with redemption rights, you have some additional time to try to reach a repayment arrangement with your lender.

When to Leave the Property

Generally, you can stay on the property until the court orders you to leave. This usually requires a separate lawsuit against the borrower. These cases are often filed in the same courts that handle evictions. While you can hold out until the sheriff comes to set you out, it’s a better idea to move sooner. The new owner of the property can usually recover court costs and attorney fees against you. In addition, you will have short notice to find a place to stay, and if the sheriff sets you out, you and your belongings will literally be in the street.

Always consider consulting a lawyer in a foreclosure situation.

Case Studies: Foreclosure Process and Legal Implications

Case Study 1: Negotiating With Lenders to Avoid Foreclosure

We explore the importance of negotiating with your lender before receiving a default notice. John, a homeowner in California, faced financial difficulties and fell behind on his mortgage payments.

Understanding the consequences of foreclosure, John proactively contacted his lender to discuss potential solutions. By collaborating with his lender, John was able to work out a modified repayment plan that allowed him to catch up on his missed payments and avoid foreclosure.

Case Study 2: Nonjudicial Foreclosure and Trustee Sales

Mary, a homeowner in Arizona, experienced financial hardship that led to mortgage default. As Arizona allows nonjudicial foreclosure, Mary’s lender initiated the foreclosure process without involving the court.

This examines the process of trustee sales and the steps taken by Mary’s lender to auction the property. Despite her efforts to negotiate with the lender, Mary’s property was eventually sold at auction, highlighting the importance of early intervention and exploring alternative options.

Case Study 3: Judicial Foreclosure and Defense Strategies

Lisa, a homeowner in Florida, found herself facing foreclosure due to unforeseen circumstances. Florida follows a judicial foreclosure process, requiring the lender to file a lawsuit against the borrower.

This delves into Lisa’s journey through the judicial foreclosure process, emphasizing the limited defenses available to borrowers. We explore how Lisa sought legal representation and worked with her attorney to identify possible defenses and negotiate with the lender.

Case Study 4: Redemption Period and Repayment Arrangements

Mark, a homeowner in Minnesota, experienced financial instability that led to foreclosure. In Minnesota, homeowners have a redemption period during which they can reclaim their property by paying the purchase price, costs, and interest.

This examines Mark’s efforts to negotiate with his lender and explore repayment options during the redemption period. We discuss the intricacies of redemption rights and the potential for successful resolution even after the foreclosure process has begun.