How Long a Foreclosure Takes
Foreclosure rates have been at an all-time high in the United States since 2008. Those facing possible foreclosure should familiarize themselves with the laws of their state. Each state governs the foreclosure process for properties within its boundaries. The length of the foreclosure process varies greatly across the country. The shortest foreclosures happen in Texas and Georgia, both taking about one month to complete. Illinois and New York foreclosures can take a year or longer.
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Judicial Foreclosure
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Judicial foreclosures are required in states practicing the lien-theory of property mortgages. This process stipulates that a lender preparing to foreclose because of a default on a mortgage loan must file a formal complaint, or lawsuit, against the borrower. The judicial process can take some time to complete due to the court schedule and the right of the borrower to a defense. Often, judicial foreclosures cost the lender time and money, so they try to process them as quickly as possible. Though not all states require judicial foreclosure, almost all offer it. A few don't offer it at all.
Non-Judicial Foreclosure
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The non-judicial process is more lender-friendly. To execute foreclosure outside of the court system, the lender needs to have a valid security instrument containing a power of sale clause. This clause gives the lender the authority to handle the foreclosure without the interjection of the court. The security instrument, called a deed of trust, acts to place the property under the control of a qualified trustee. If a foreclosure must occur, the trustee handles it on behalf of the lender. Usually, non-judicial foreclosures can proceed more quickly than judicial foreclosures because the lender's trustee is usually only bound by state guidelines and personal schedules.
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Auction Sale
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If the foreclosure process reaches the point of the auction sale, it can proceed in a few ways. Often, the trustee or the county sheriff will oversee the auction. Generally, the highest bidder wins. Leading up to the sale, states mandate the timeframe for various events to occur. The lender must serve or send the borrower a notice of sale containing the time and date. Also, the trustee or sheriff must advertise the sale in a publicly circulated newspaper for a time prior to the auction.
Redemption Period
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Some states offer a right of redemption to the borrower after a foreclosure sale occurs. During the redemption period, the borrower can remit the full payment to the lender to regain property ownership. Those attending a foreclosure auction in a state that allows borrower redemption should be aware of this. A down payment or cash paid for the property may be lost if the borrower can repay the lender. About half of the 50 states allow redemption periods. These range between 20 days to several years. The terms of redemption are not only contingent on state laws, but also the terms of the foreclosure and court decisions.
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