Understanding Judicial Foreclosure

Judicial foreclosure is a type of foreclosure in which the court system has to be involved. This type of foreclosure is used when a mortgage does not have a "power of sale" clause in it. This does not provide the lender with the ability to sell the property without authority. 

When the mortgage goes into default, the lender will go to the local court system and file suit against the home owner. The judge will then look at the facts and issue a ruling in the case. If the judge finds that the debt is legitimate, she will issue an order to have the house auctioned off. 

The county government will then handle the auction of the property. The money that is generated from the sale will then be given to the lender to repay the debt obligation. In some cases, if there is any money left over after repaying the debt, the homeowner will receive the difference. This represents the equity that he has accumulated in the property.

Judicial foreclosure is used in certain states according to state laws. This is done so that homeowners can protect the equity that they have built up in their homes.

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