For millions of people around the country, a home is a place to live, but it’s also a place for making new memories, growing a family, and building a future. If you fall behind on payments on your home loan and go into default, you could eventually face the threat of foreclosure. In a nutshell, foreclosure is a process that allows lenders to recover the balance on defaulted loans by repossessing, and, typically, selling the secured property.
Foreclosure can be intimidating, stressful, frustrating, and, in some cases, downright terrifying. There are many moving pieces that go into the foreclosure process, and the laws and statutes governing foreclosure vary from state to state (for a local reference, we’ve previously outlined the broad overview of a typical Illinois foreclosure here).
For homeowners falling behind on payments and facing the possibility of foreclosure, it’s important to educate yourself on the ins and outs of the foreclosure process in your area. There may be solutions available to you, depending on local laws and the specifics of your unique situation. Gaining some insight into how the foreclosure process works may allow you to go into this busy period with greater clarity, focus, and confidence.
One foreclosure concept that’s crucial to understand is the difference between judicial and nonjudicial foreclosures, and which may apply in your area.
Judicial Vs. Nonjudicial Foreclosures: The Key Differences
Judicial and nonjudicial foreclosures differ in several key ways. The most essential contrast is quite simple: With a judicial foreclosure, the process must go through the state courts, and a judge must issue approval to foreclose. A nonjudicial foreclosure can allow a lender to reclaim and sell a home without having to go through the court system.
In many states, the foreclosure process is often typically judicial or non-judicial. Here in Illinois, for example, all foreclosures are judicial foreclosures. In some states, non-judicial foreclosures are more common. Some states employ both processes, and others have a foreclosure process that is primarily nonjudicial, even though it may require some court supervision.
A general rule of thumb? It may help to associate different types of foreclosures with different home lending instruments. Judicial foreclosures are typically employed when the lender issued a mortgage; nonjudicial foreclosures generally apply when the lender secured the home loan with a deed of trust.
Judicial Vs. Nonjudicial Foreclosures: How Do They Work?
Generally speaking, judicial and nonjudicial foreclosures occur over different timelines, with distinct steps and benchmarks passing along the way. Broadly, a judicial foreclosure may take anywhere from several months to more than a year to complete, depending on the actions taken by the borrower and the lender and the laws of your state. A nonjudicial foreclosure is typically a more expedient process, and may take as little as a few months or less, depending on your local laws.
Typically, with a nonjudicial foreclosure, a lender must issue a notice of default, then have that notice recorded with the appropriate parties (such as a county records office). The borrower will then have a specified period to reinstate payments. If the borrower cannot make payments or reach a new agreement with the lender, a notice of sale is issued and an auction is held.
There are more moving parts to a judicial foreclosure. After the borrower falls behind on payments, the lender will first typically reach out with a notice, and then move to expedite the process. The process begins in earnest when a lender files a foreclosure lawsuit in the courts; the borrower is then given an opportunity to respond to the complaint (if no response is filed, the process may end swiftly with a default judgment issued in favor of the lender).
After a response is filed, there will be a discovery process, and the lender will likely attempt to move for summary judgment. At this point, there will be back and forth (and several different potential redemption periods, depending on where you live), as lenders and borrowers, along with their legal teams, look for a solution. For borrowers, it may be possible to offer a legal defense, or work out a loss mitigation agreement with the lender (such as a deed in lieu of foreclosure or a payment plan). If the foreclosure proceeds, an approval of sale must be issued and the borrower leaves the property as a foreclosure sale/auction is held. Keep in mind that the details of this process – including notification requirements – will vary from state to state.
Can An Attorney Help?
Whether judicial or nonjudicial, the foreclosure process can be complex. It’s a lot to take on alone, even in the best of circumstances. Consulting with an experienced local attorney may be one of the very best ways to understand the foreclosure laws for your area, as well as all of the courses of action available to you, depending on your unique circumstances.
From ensuring that your paperwork is filed correctly and on time, to finding a practical solution tailored to your needs, an attorney can be a vital resource throughout every step the foreclosure process, helping you navigate this daunting procedure with the insights you need to succeed.
Want to Discuss Illinois Foreclosure In More Depth?
If you have any questions about your unique situation, don’t hesitate to get in touch with the attorneys and staff of the Gunderson Law Firm. Based in Chicago’s Roscoe Village, the Gunderson Law Firm possesses unparalleled expertise and insight on real estate, bankruptcy, and foreclosure in Chicagoland and Illinois more broadly, reinforced by years of experience and long-term connections throughout Chicago’s real estate, finance, and insurance industries.
Above all else, we are committed to providing the advocacy you need without the attitude you don’t. If you have found other lawyers to be more about their egos than about your case, talk to Gunderson Law Firm. Our attorneys are not only highly knowledgeable and experienced, but very down-to-earth. We’re all about great representation and timely results, tailored to your unique circumstances. Drop us a line whenever you’re ready to keep the conversation going.
