First of all, the tendency to foreclose using the court system varies state by state. A quick web search can provide you with the information you need to know if your potential foreclosure would happen within the court system in your state. In the case of the judicial foreclosure, the lender files a lawsuit with the state court. With non-judicial foreclosure, however, the lender continues to follow very strict legal state procedures. A notice of default is generally sent to the borrower.

With judicial foreclosure, the borrower is generally served in person, by mail, or publicly (such as in the newspaper) a complaint that indicates that the borrower is in default and the property will be sold. In non-foreclosure states, several things, or a combination of things could happen. Typically, you will receive a notice of default, then a notice of sale. You could receive a combined notice of both default and sale. Or you could receive something via publication such as that of a newspaper notifying you of the sale of your home.

One major difference between judicial foreclosure and non-judicial foreclosure is that the judicial process can take months to even years to resolve, whereas non-judicial foreclosure is a more swift process generally taking a matter of months.

Judicial Foreclosures

When you fall back on paying your mortgage, if you are in a court-run foreclosure state, the lender will file a lawsuit with the state to get back the money they are owed. In a judicial foreclosure state, the lender must go to the court to get the ball rolling on a foreclosure.

A lender can get started on foreclosure the very first time you miss a mortgage payment. Now this isn’t the norm, usually lenders wait for several missed payments before pursuing foreclosure in most states. Usually with the first missed payment, the loan servicer will call and ask where their payment is, and when you will be paying them back. Upon the second missed payment, the lender will continue to make collection calls. It’s the third payment that gets things accelerated. You may receive a “Breach Letter” or a “Letter of Acceleration” that says you have 30 days to bring everything back to an even balance, or they will start the foreclosure process.

Then, intent to commence foreclosure is communicated by the lender, giving the borrower a chance to make up the missing payments plus fees and interest. If the borrower does not follow through with the conditions, the lender files a lawsuit. You then have a choice to respond. If you don’t respond, you’ll probably lose your home by default, but if you respond, there are some arguments that are defensible for keeping your home.

If you can redeem the mortgage, by paying it off in full including attorney’s fees, great, you’ll likely keep the home. Otherwise you may be served a notice of sale. Then an auction is held. Whatever happens, you are not required to move out immediately. You do not have to leave until you are served an official eviction notice.