Different foreclosure laws create huge differences in time and process
Foreclosure rates continue to drop nationwide, but state-by-state numbers can be skewed because foreclosure rules vary widely from state to state.
Realtytrac.com reports on July 12 that one out of every 1,026 houses in the United States is in foreclosure, and Florida is the No. 1 state in terms of most foreclosures with one in every 355 homes. But Florida’s foreclosure rules are different than the No. 5 state on the list, Nevada, which has one in every 720 homes in foreclosure.
In Nevada, foreclosures can be conducted judicially or non-judicially, which means some foreclosures must go through the courts and others do not have to. According to realtytrac.com, the judicial procedure requires that a lender must prove that the borrower/homeowner is in default in court. There are several steps required to complete that process and initiate foreclosure.
The non-judicial foreclosures are based not on mortgages but are based on deeds of trust which includes a power of sale clause allowing the trustee “to initiate a mortgage foreclosure sale without having to go to court.” The trustee does have steps to go through but they are not as extensive or time consuming as court-based foreclosures.
Also, in non-judicial foreclosures, the lender is only required to communicate with the home owner once or twice before completing the foreclosure, giving the home owner far less time to react.
Twenty-five states allow for both judicial and non-judicial foreclosure procedures. In most of those states, the judicial foreclosures are used far less often.
States vary widely in the average process periods. Texas reports the shortest average process period at 27 days, while New York’s average process period is 445 days.
Just over half the states in the United States allow home owners who have suffered through a foreclosure a redemption period, when they can buy back their home. Most of those states allow a full year for redemption before the house can be resold, but New Jersey has just a 10-day redemption period. Twenty-four states do not allow for mortgage redemption.
Finally, the sale can be finalized by several different methods. In some states, the deal is concluded by the courts, and in some states it is a trustee that finalizes the transaction. In some states, including many in the Midwest and Great Plains States, the deal is concluded with the county sheriff.
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.