Judicial v. Non Judicial Foreclosure

Basically, non-judicial foreclosure means that the financial institution can initiate foreclosure on a real property if periodic mortgage payments are not made on time or within the terms of the mortgage agreement with a borrower and given a period of notification, may sell that real property to highest bidder on courthouse steps or foreclose the loan.

In judicial foreclosures, the lender must approach the governing court in the county and go through the legal steps of acquiring the property and thereby extending the total time a property turns over.

As you can guess, the time it take to process a foreclosure through the court system will take longer, but how much longer???? (i.e., New York may take >1,050 days.)

Also, according to Lender Processing Services (LPS), current foreclosure inventory in judicial foreclosure states is three (3) times that of non-judicial foreclosure states.

LPS also recorded about 1.6 million properties =>90 days delinquent but still not in the foreclosure process.

Whether or not banks make errors on foreclosing on mortgages, and unfortunately some people lose jobs they can’t regain their prior income, it’s a safe bet that the process drags on longer in judicial foreclosure states than non-judicial foreclosure states if someone just isn’t paying their mortgage on time.

And the next question: Do the majority of homes under judicial foreclosure result in “zombie” homes prior to foreclosure?

Source: WSJ, 1-5-2013 – Opinion Section

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