What Are You Facing in a Foreclosure Lawsuit?
About half of all states require lenders to pursue foreclosure in court through a lawsuit. In most other states lenders can choose between a judicial or nonjudicial process. Although both the foreclosure procedures and court regulations vary from state to state, the general process is the same: the lender files a lawsuit, the borrower is served, the court acts. In most states a court-issued foreclosure judgment results in the property being put up for sale at auction.
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Complaint
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A judicial foreclosure begins with a complaint filed in the county in which the property is located. The lender or court serves the borrower with the complaint. The borrower can answer the complaint or ignore it. If the borrower fails to respond, the lender usually requests a summary, or expedited, judgment against the borrower. If the borrower files an answer, he is granted a hearing. The borrower is not required to respond and his failure to respond will not result in ramifications beyond the foreclosure itself and whatever other actions the lender is entitled to by state law.
Court Hearing
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The principal benefit to a borrower of a judicial foreclosure is the right to a hearing. By answering the complaint, the borrower can delay the foreclosure and provide a forum to put up a defense. In nonjudicial foreclosure, a borrower may not have any venue within which to put up a defense to the foreclosure until after it is over.
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Court Judgment and Sale
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If the judge approves the foreclosure, the court issues a judgment against the borrower. This entitles the lender to the proceeds from a forced sale of the property. The court or lender is required to give notice of the auction sale, usually by publication in a newspaper and sometimes additionally by posting the site. The property is sold to the highest bidder, which is often the lender, based upon the dollar value of its judgment. In a few states, such as Connecticut, the court can allow the property to be transferred directly to the lender without a sale if the value of the property is less than the outstanding loan balance.
Eviction
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In a nonjudicial foreclosure, a lender has to file a separate court action to evict the owner if he has not moved out by the time the title transfers. In some states in which a judicial foreclosure is undertaken, the right to possession is granted with the foreclosure, making it unnecessary for the lender to file a separate lawsuit. In Florida, for example, a foreclosing lender must simply obtain the writ of possession from the county clerk before giving it to the sheriff to initiate a forcible eviction.
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References
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