There has been an alarming rise in the number of foreclosures over the past few years as a result of the economic turmoil and collapse of the real estate market. These are some of the types of foreclosures and the way they work.
Foreclosure is the process by which a lender can take possession of a property used to secure the loan when the borrower fails to repay the loan. There are two main types of foreclosure in America; Judicial foreclosure and non-judicial foreclosure.
Judicial foreclosure
This occurs when the lender files a civil lawsuit against the borrower and can be either a foreclosure by sale or a strict foreclosure. In a strict foreclosure the court sets a date by which the borrower should settle his debt and if he fails the court awards ownership to the lender. Foreclosure by sale involves the property being auctioned.
Non judicial foreclosure
The lender advertises and sells the property by public auction with no intervention from the courts. This can be done only if the borrower agreed to the process at the time of taking the loan and the process follows the rules and laws set out by the state. This process is faster and cheaper than judicial foreclosure and is used more commonly.