How the non-Judicial Foreclosure Process Works

Foreclosure is a process that no one wants to go through. In the event that a property goes into default, there are two main methods that are used to transfer the property to its new owner. The property could go through a judicial or non-judicial foreclosure. A judicial foreclosure is administered by the local government. It will be handled in tandem by the local judge and sheriff. A non-judicial foreclosure on the other hand works a little differently.

No Court Intervention

With a non-judicial foreclosure, the biggest procedural difference is that no court will have jurisdiction over the procedure. You will not have to spend any amount of time in a courthouse. The process will instead be governed by state statutes. Whatever is predetermined in your state as the proper way to proceed will take precedence. This process is not available in every state, as it is up to each state legislature to determine the best way to handle these situations. The states with primarily non-judicial foreclosures are:

  • Alabama
  • California
  • Georgia
  • Hawaii
  • Maine
  • Mississippi
  • Missouri
  • Montana
  • Nevada
  • New Hampshire
  • Oklahoma

Documentation

In a non-judicial foreclosure, the paperwork trail is a little different. When your property goes into default, you will be mailed a default letter immediately. This will let you know that you are now in default and the property is at real risk of being foreclosed upon.

You will need to take immediate action at that point to prevent it from happening. If a loan reinstatement is not pursued on your part, it will move onto the next step. From that point, you will receive a Notice of Sale in the mail. In addition to your receipt of this document, it will be posted on public record. It will be posted in newspapers, and bulletin boards. It will have a date and time of upcoming sale in the notice. The sale is planned and unless drastic measures are taken before then, it will be sold.

Auction

The last step in the non-judicial foreclosure process is the property auction. This will be held in the form of a public auction and anyone that wants to can bid on the property. In order to bid on the property, you will have to have the entire amount in cash at or near the time of the auction. In some cases, you can put down a large down payment at the time of the sale and come up with the rest of the money within a week. The highest bidder wins the house and it is then the full property of the winner.

State Regulations

States are either judicial, non-judicial, both or primarily judicial. It is important to research your state’s requirements and guidelines. If you do not understand, visit your local county courthouse for free legal aid because your home is at stake.