Foreclosure Laws by State
Although the Federal government is involved through loan guarantee programs, foreclosure laws are set at the state level, and there is a wide variation from one state to the next. In some states borrowers are allowed up to two years to redeem their home after foreclosure. In a others states, there is no right of redemption.
The biggest concern to most distressed homeowners is whether their state is a recourse or non-recourse state. In recourse states the lender will sometimes sue the homeowner for any deficiency (the balance left on the loan) after the house is foreclosed upon or short sold. Foreclosure statutes are change frequently so be sure to consult a lawyer in your state to get current law and its interpretation.
Although state laws vary in their rules and their application, there are essentially two forms of foreclosure proceedings: judicial and non-judicial. A judicial sale is a lawsuit that is filed with the court and is subject to judicial approval. A non-judicial foreclosure is done through the power-of-sale clause in a deed of trust and follows a contractually agreed upon procedure.
When a homeowner gives the lender a deed of trust, they contractually agree that the trustee can sell the home in the event of default. Unless, the trustee violates the terms of your contractual agreement, a court is usually not involved.
Every state has specific notice requirements. The foreclosed homeowner must receive notice and, in most states, the sale must be adequately advertised in a county newspaper. The publication period is generally once a week for four weeks. Generally, a professional foreclosure company hired by the lender will follow the notice procedures precisely.
Click the button below to see specific state by state laws.
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