About Home Foreclosures

Types of home foreclosures

There are a few different types of foreclosures. Many factors affect which one is used. Some states allow only one type of foreclosure and other states allow any type of foreclosure. If you are facing a foreclosure it is best to understand a little about each type, so once the process begins you can understand what is going on.

The first and most complex type of foreclosure is foreclosure by judicial sale. This type of foreclosure is done under the supervision of the court. Everything is handled as a legal issue. The final outcome is sale of the property with the money going to pay off the mortgage, then to any lien holder. There is a short trial involved with pleadings and a judicial decision. The process varies in details from state to state. In general a public official takes care of the final sale. While this form of foreclosure is pretty straightforward it may take more time from start to finish because it must go through the court system and follow their schedule.

Another type of foreclosure is foreclosure by power of sale. This type of foreclosure is not through the court system, although, at some point a judicial review may be required to resolve some issues. A foreclosure by power of sale is much quicker than a judicial sale. It is also less expensive. The parties involved are notified through public advertisements, such as in the newspaper. The mortgage holder processes all paper work and takes care of notifications instead of the court system. Sometimes in a power of sale it is required to get a deed of trust. A deed of trust gives power over the property to a trustee that then holds the property until the matter of foreclosure is resolved.

No matter the type of foreclosure they all usually follow the same general procedure. The property first enters a pre-foreclosure stage. This is when it is most likely to reach a compromise with the lender and figure out a payment plan that keeps the property out of foreclosure. If the foreclosure is not resolved in pre-foreclosure then it continues into foreclosure. Once the property is in foreclosure the property is put up for sale. This is usually done at an auction or sometimes the lender just takes the property back and resells it themselves. Also in every type of foreclosure it is necessary for all persons holding an interest in the property to be notified, this means anyone who would be affected by the loss of the property. In most cases this means anyone who holds a lien against the property. This notification is done during pre-foreclosure. The type of foreclosure usually just dictates whether the foreclosure is handled in the court system or outside of the court system, it does not change the general procedures.

These are the most common forms of foreclosure. While foreclosure by judicial sale and power by sale are not the only types of foreclosures, they are the most recognized. There are other lesser used forms that vary in procedure. The foreclosure process is a state governed procedure, so if you are interested or need to understand more about each type of foreclosure then you should check the foreclosure laws of your state.