Judicial Foreclosure In IllinoisJanuary 29th, 2010
Author: admin
The past couple years have seen such a rise in foreclosures that even the government has characterized them as epidemic. The Bush Administration passed a foreclosure act in 2008, and it was amended in 2009. Â
There are basically two types of foreclosure, plus a third type that rarely occurs; we'll discuss it at the end. Keep in mind that foreclosure laws vary from state to state. It is vital to check your own state's home page for current foreclosure practices.Â
Judicial foreclosures are those that are handled through the court system. The lender files a complaint and proves to the court that a loan was made and that the borrower, also known as the mortgagee, is failing to repay the loan. The court sends notice to the homeowner; this can happen by mail, by personal service through a court appointee, or through publication of a foreclosure notice. Usually the homeowner is notified via two of these methods.Â
The homeowner has an opportunity to be heard in court. This is not to be construed as an opportunity to justify default. If there is a loan and it's in default, the court will find in the lender's favor. This results in a judgment against the homeowner, which includes the amount owed as well as foreclosure costs. It is at this time that a sheriff's sale is authorized, and this must be publicized.Â
The home will be auctioned either at the courthouse or at the home, and the highest bidder wins the home. After the auction, the court must confirm and then record the sale. At each of these steps along the way to foreclosure, the homeowner has a chance to redeem his mortgage. Most states provide for a redemption period after the sale, during the confirmation period, when a homeowner can still recover the mortgage.
Non-judicial foreclosures move along much more quickly since they do not include court involvement. The lender mails the homeowner a letter of default, and a Notice of Default is recorded at state offices. If the homeowner does not rectify or make good on his debt, a Notice of Sale is published and recorded. After a specified amount of time, during which the homeowner can still save his mortgage, the sale is held, the highest bidder wins, and as above the sale must be confirmed and recorded.Â
All states allow both kinds of foreclosures, with these exceptions:Â Judicial foreclosures only are permitted in Connecticut, Delaware, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Pennsylvania, South Carolina, and Vermont.Â
Non-judicial foreclosures are only permitted in the District of Columbia, Michigan, New Hampshire, Tennessee, and West Virginia. In Utah, a trustee assigned by the court makes a decision on foreclosure procedure.Â
The third type of foreclosure, rarely used, is called strict foreclosure. This occurs shortly after the start of a mortgage. Usually the borrower discovers within a month of two after taking possession of the property that he cannot afford his loan payments. With the mortgagee having no equity to speak of built up in the property, the property reverts immediately to the lender and the debt is canceled.   Â
Senate Bill 896 signed into law by President Obama, known by several titles including "Helping Families Save Their Homes Act of 2009," allows for help to homeowners, mostly in the form of counseling. Homeowners can then learn of ways to mitigate their indebtedness through loan refinancing, forbearance (reduced payments), sale before foreclosure, the use of mortgage revenue bonds, turning your deed over to the lender (not applicable for first mortgages), and other methods.Â
When you're looking for Boulder real estate in Colorado, try Automated Homefinder.
