The Unthinkable: Foreclosure

The foreclosure process varies from state to state and is dependent upon whether your state is a judicial or non-judicial state and whether your state uses mortgages or deeds of trust for the purchase of property. Most states that use mortgages are judicial states, while most states that use deeds of trust, are generally non-judicial states.

In judicial states—of which there are 22 states—lenders must pursue foreclosure through the courts. Once a lender has exhausted its attempts to resolve the debt directly with the borrower, the attorney for the lender files a lis pendens or “pending lawsuit” with the court.  The lis pendens serves as notice to the public that the lender has filed a lawsuit against the borrower. 

Lenders pursuing foreclosure against borrowers in non-judicial states—of which there are 28 states—do not need to use the courts to foreclose on your property. Lenders retain a “power of sale” right that enables them to foreclose without going to court. They are required to notify the borrower with a Notice of Default, or NOD, and a Notice of Sale (NOS) prior to selling the home or transferring ownership.