When you are behind on your mortgage it can be psychologically draining. Phone calls arrive daily demanding payment. Then comes the day you get that letter from the lawyer. Do you know what will happen next?

There are 2 types of legal action your lender can take against you

Is it so:

* Judicial execution

* Nonjudicial foreclosure

The type of action you will be subject to is determined by the state you live in, and can be easily found by consulting your state’s civil statutes. We’ll take a brief look at each in a moment. Ideally, you want to reinstate your mortgage before it gets that far. But sometimes it’s just unavoidable. “Life happens.”

As with any legal matter, the steps you go through to resolve the issue are outlined by law. And yes, it’s complicated and time-consuming to learn what you need to know, but since we’re talking thousands of dollars, it’s worth the effort on your part to educate yourself.

We are also talking about your psychological well-being. Much of the stress people feel when going through difficult times comes from fear of the unknown. So another benefit of learning what’s going to happen and being prepared for it is that it can eliminate much, if not most, of any fear. Well, enough to say. Let’s see each one. First, court.

Judicial execution

This action is just what it sounds like. You are going to court. This is what is happening:

* Your lender files a lawsuit against you, making you the defender.

* Receive a court summons (just like anyone else with a financial interest in your property)

* Your lender notifies the county reporter to make the pending foreclosure a matter of public record.

* You have time to respond and present your case

* There are two outcomes that can occur next. Either the judge will order a foreclosure, or dismiss the case

* If the foreclosure is ruled to continue, the judge will order the repossessed home to be auctioned at a foreclosure sale, with publicity required to alert the public that a foreclosure sale is taking place and when it will take place .

* The lender sells the house to the highest bidder or puts it back into inventory if none of the offers were suitable

The good news is that even after all of the above, you still have legal redemption rights to try to keep your home, although time will continue to tick until your rights have been exercised or have expired.

Nonjudicial Foreclosure

In nonjudicial foreclosure, the results are much the same, but the process is different. Instead of filing a lawsuit and taking it to court, your lender uses a clause in your mortgage contract called a “power of sale agreement.” What this means is that if you fail to meet the terms of the contract you signed (for example, by missing one or more of your scheduled payments), the lender has the right to file a notice of default with your county recorder’s office. .

So this is what happens:

* The lender files a notice of default

*A sale date is determined

* The sale is announced

* Your home is sold at foreclosure auction to the highest bidder (or, at the lender’s discretion, put back into their inventory)

* You typically have statutory redemption rights, allowing a predetermined period of time, to meet your obligations AFTER the sale has been made to keep your home

* If you do not exercise your right within the time allowed, your rights expire and the deed to your home goes to the highest bidder at auction.

So no matter what process your state statutes authorize, knowing where things are going has many benefits. Mainly, by deciding how you want to respond during each step of the process, and knowing how much time you have to do it.