If you fail to make your mortgage payments, foreclosure is sure to follow. There are two types of foreclosure you may encounter: judicial and nonjudicial. In a judicial foreclosure, the entry of a judgment is one of the final steps before the seizure and forced sale of your home.
In states that mandate judicial foreclosure, the state's court system oversees the entire foreclosure process. Approximately half of all states practice judicial foreclosure, and each state has its own procedures. A judicial foreclosure typically lasts longer than a nonjudicial one and can take up to 14 months to complete in some states, depending on how long the lender waits to begin the process after the borrower defaults.
Though specific foreclosure regulations differ by state, most states follow the same basic procedure. After you have defaulted on your mortgage payments, your lender files a complaint with the court. The court serves you with a copy of the complaint, and you have a certain amount of time to respond. If you don't respond or can't prove that your payments are current, the court enters a judgment against you.
After the court enters the judgment, the lender typically must obtain a writ of execution, which he uses to force the sale of your home. In most states, the lender sells your home in a sheriff's sale, which is a public auction conducted by the county sheriff. During the auction, anyone can bid on your property, and the sheriff sells it to the bidder who makes the best offer.
Depending on the laws in your state, you may still owe your lender money after the forced sale if the proceeds don't cover the full amount of your debt. Even if you don't owe any money to your primary lender after the foreclosure is complete, lenders of second mortgages may be able to sue you for any debts you owe to them. Some states allow you a mortgage redemption period of several months after the foreclosure during which you can redeem your property by paying the balance you owe plus interest.