There are basically two types of foreclosures:
judicial foreclosure and non-judicial foreclosure.
About a third of the states in the nation use judicial foreclosure. This type of foreclosure involves issuing a lawsuit against the homeowner. If the homeowner does not respond to the lawsuit, the mortgage lender wins the case and the home is put up for sale in an auction. A court official presides over this auction and sells the seized house to the highest bidder. The mortgage lender also puts in a bid during the auction. This bid amount can go up to the amount owed on the home loan. If no bidder beats the mortgage lender's bid, the mortgage lender gets the title to the home. If the bidding goes higher than this bid amount, then the winning bidder is issued the deed to the house.
A non-judicial foreclosure is a foreclosure that does not involve a lawsuit. The mortgage lender issues the homeowner a notice of default and a notice of its intent to sell the homeowner's property. The homeowner has a chance to stop the sale by paying the default amount owed or by coming to an agreement with the mortgage lender. This agreement may include setting up a repayment plan and being allowed the option of delayed payments for a specified amount of time. The homeowner can also stop foreclosure by filing for Chapter 13 bankruptcy. If the homeowner fails to stop the foreclosure, the house is auctioned off in the same manner as a judicial foreclosure.
A foreclosure can also occur without a sale. In a strict foreclosure, the title of the house goes directly back to the mortgage lender without the need to go through an auction.
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