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Foreclosure Procedures in Four Foreclosure-Clobbered States

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By : John Cutts    99 or more times read
Foreclosure procedures in U.S. states generally follow the same basic flow, but they have some key differences. Here are summaries of the foreclosure processes and laws in four of the most foreclosure-battered states: California, Nevada, Florida and Arizona.

The basic foreclosure process starts with the filing of a notice of default when the homeowner fails to pay at least 2 or 3 monthly loan payments. If the homeowner does not do anything to restore the loan account to current status within 21 to 25 days after receiving the notice of default, the lender files a notice of sale.

The foreclosure process moves on to the trustee sale if the homeowner does not intervene. If the property is not purchased during the sale, the lender buys back the property and adds it to its REO file.

This process varies as lenders follow judicial or non-judicial foreclosure procedures depending on the states where the properties are located. In judicial foreclosures, a judge needs to approve the foreclosure filing before the property is sold. This takes a longer time. In non-judicial foreclosures, the lender follows what is described in the mortgage contract signed by the borrower. This takes a much shorter time.

In California, lenders are allowed to follow either the judicial or non-judicial process depending on what is in the mortgage contract or deed of trust. If there is no power of sale in the contract, the lender needs to file its foreclosure action in court.

In Florida, foreclosure is always judicial and oftentimes takes 180 days. The court reviews the foreclosure filing if the lender followed all foreclosure requirements and examines all objections to the foreclosure suit. The court also provides a redemption period for the homeowner, which ends at the foreclosure sale date. In Florida, the lender can sue the borrower for deficiency if the sale price is not adequate to cover the loan balance.

Just like in California, lenders in Arizona can foreclose on mortgages either judicially or non-judicially, consuming about 90 days to complete the process.

Lenders in Nevada can also use either the judicial or non-judicial process to foreclose, taking typically 120 days.

In California, Nevada and Arizona, non-judicial foreclosure procedures take place if the power of sale clause is included in the deed of trust or mortgage agreement. The clause authorizes the lender to sell the property to pay the loan balance in case the borrower defaults.

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