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Non-judicial foreclosure is a foreclosure that proceeds without the courts getting involved. Since rules governing foreclosures differ between states, there are some states where non-judicial foreclosure is the only foreclosure that's permitted. In most states, however, non-judicial foreclosures either don't occur at all or happen alongside judicial foreclosures. Because the non-judicial foreclosures take place outside the court, they are harder to challenge than judicial foreclosures. Nonetheless, if you contest it promptly and you have a good lawyer, you may be able to prevail.
Understanding Non-Judicial Foreclosures
Non-judicial foreclosures are based on the deeds of trust that have a power of sale clause. If you default on your mortgage, the sales clause allows the lender to begin foreclosure without getting permission from the court. All it has to do is send out a notice that you are in default and that you have a certain period of time to catch up on your payments. If you don't respond by the end of that period, the lender can begin the foreclosure proceedings whenever it wants.
In District of Columbia, Michigan, New Hampshire, Tennessee, Utah and West Virginia, real estate properties are purchased using deeds, so non-judicial foreclosure is the only form of foreclosure available. In Connecticut, Delaware, Florida, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Pennsylvania, South Carolina and Vermont, real estate can only be purchased with mortgages, so non-judicial foreclosures don't exist. The remaining states allow both mortgages and deeds, so both types of foreclosure co-exist.
Contesting the Foreclosure
While non-judicial foreclosures can proceed without the courts' involvement, they are bound by the same state and federal laws as the judicial foreclosures. This means that you have the right to challenge the legality of the foreclosure. However, because the foreclosure is non-judicial, you must initiate all the legal procedures by yourself.
Once you find yourself facing a foreclosure, your first step should be to consult your lawyer. If you don't already have a lawyer, you will have to hire one. The lawyer will help you file a temporary restraining order with the state court. You should file the restraining order as soon as possible. The restraining order will stop the foreclosure proceedings for up to 10 days. This will give you and your lawyer a window to prepare your case. Your case should explain why the foreclosure was illegal. It must be framed in proper legal language and supported with evidence.
Once the case is filed, the court issues the preliminary injunction against the lender. This will stop the foreclosure proceedings until the judge evaluates your case. From there, the case can either go to trial or a judge can make the ruling from the bench.
If the judge rules in your favor, he or she will issue a permanent injunction against the lender. This will stop the foreclosure proceedings altogether, allowing you to keep your home. If the judge rules against you, the lender can resume the foreclosure proceedings. You have a right to appeal, but the court may not be willing to grant you any further injunctions.
In some states, the law gives you a chance to regain your property after the foreclosure is complete and the property is sold off. This is known as the right to redeem. It allows you to recover the ownership of the property by repaying the successful bidder. You can find out if your state recognizes the right to redeem by contacting your state attorney general's office.
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