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Judicial Or Non-Judicial? That is the Question


In regards to the process of foreclosure on a home or property, some states incorporate a judicial process whereas others take a non-judicial route. Prior to committing to a particular foreclosure, it is important to know which process the state in which the property of interest is in incorporates. This will give you information on what type of process you will be dealing with and what contracts will be needed in making the deal. For example the state of California requires a trust deed contract and the foreclosure process is a Power of Sale, whereas in the state of New York, investors need are required to utilize a mortgage contract as this state employs a judicial process.

The judicial process only works in lien theory states. The process is put into effect when a lender files a complaint in regards to a foreclosure property. The lender officially declares its plans to take legal action against the borrower. Of course, evidence of loan default and late payment on the loan must be admitted for the case. A Lis Pendens, which is an official document that is a matter of public record, is served to the borrower. This document serves as a summons by the court and the state that a lawsuit has been filed against the borrower.

The judicial process, as its title indicates, involves the services of a judge and any issues are resolved within a courtroom. The case is presented before a judge, with or without the presence of a jury. The outcome of the case is contingent on the final decision of the judge. If a borrower cannot provide sufficient evidence in support of his/her case, the judge generally rules in the favor of the lender. The lender then takes possession of the home or property. The public at large is notified of the for sale status of the foreclosure. It is at this time that the piece of real estate ether goes to public auction and is sold to the highest bidder or it is sold to another investor privately.

States that incorporate a non-judicial foreclosure process are in a sense being precautionary because specifications foreseeing possible problems that may occur are included. This process works in theory states so liens are not necessary. The non-judicial foreclosure process does not involve the approval of the court system. Instead, a trust deed agreement is established that pre-authorizes the sale of the property in question if the borrower defaults on the loan.

The next step requires that the lender sends a notice of default to the trustee notifying of the borrower’s default on the loan. It is at this time the foreclosure process begins. In addition, the trustee also is inclined to prepare a notice of default which is filed with the county courthouse. The filing makes the foreclosed property a matter of public record. An estimated time period for sale of the property is established and if it is not sold during this time frame, a notice of sale is recorded with the county courthouse. As with the judicial process, the foreclosure is then either sold to the highest bidder at public auction or to another investor.

It is always a good idea to research laws, rules and regulations, and pre-existing conditions and terms regarding a piece of real estate. Being prepared and knowledgeable of any and all limitations in regards to the property and the state within which it is located, and also what you can expect to encounter can make the whole foreclosure process less complicated and sealing the deal will be a much smoother process


Source by Jeff S Adams

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