A nonjudicial foreclosure is a foreclosure process that is enforced by a contract between lender and seller instead of the courts. In the United States, each state sets its own foreclosure laws, with some states permitting nonjudicial foreclosures, while others require all mortgage lenders to ask a judge to order a foreclosure. In a nonjudicial foreclosure, the foreclosure process often moves much more quickly than in a judicial foreclosure, as the lender is not required to go to court. In addition, because the homeowner in a nonjudicial disclosure doesn't get to present a defense against foreclosure in a court hearing, he is responsible for filing his own lawsuit against the lender if he believes the foreclosure to be in error.
The legal mechanism that allows a lender to foreclose on a home outside the court system is included in the deed of trust, which a home buyer signs when she buys a home in a nonjudicial disclosure state. The deed of trust essentially transforms the home buyer's promissory note into a lien, or claim, on the property, without the need of a court order. The mortgage lender is then at liberty to sell the property in a foreclosure sale, though some nonjudicial foreclosure states give the homeowner a right of redemption period during which he can keep his home after paying off both the mortgage balance and any foreclosure costs and fees. If the homeowner wants to involve the courts in the foreclosure, she must do it herself by convincing a judge that there is reason to believe that the nonjudicial foreclosure is improper and that she should have a right to remain in her home until the matter is decided.
Mortgage lenders typically do not attempt to foreclose on homes until the homeowner is several months behind on his mortgage payments. After the mortgage is three or four months behind, the lender will usually send a demand notice to the homeowner, though this is not always required in states that permit nonjudicial foreclosure. This letter often gives the homeowner a specific period of time to pay the balance due before the lender begins foreclosure proceedings. However, the homeowner may not be extended the courtesy of a warning letter and may instead learn of the foreclosure proceeding when he is served with the notice of a sheriff's foreclosure sale. At that point, the homeowner has the choice of making a last-ditch effort at negotiating with the lender, going to court to challenge the foreclosure, or waiting to be evicted after the sale.
