Pennsylvania Is A Judicial Foreclosure State
News released last week reported that foreclosure filings nationwide fell to their lowest level since 2007, and were down 28% from January 2012. The number of reported filings was reported at just over 154,000, drastically off the high water mark of 357,000 in March 2010. Florida took over the number one spot, as nearly 1 in every 300 homes in the Sunshine state are in foreclosure.
Each individual state determines the process in which foreclosures will be handled. There are two types of foreclosures are known as judicial and non-judicial foreclosure. Under both systems time frames and terms can vary greatly from state to state. The following is a review of the two different foreclosure procedures.
Judicial Foreclosure
A judicial foreclosure is a court supervised process that starts with a lender filing a complaint against the borrower and recording notice in the public record that they are placing a claim on the property. This complaint is legally known as Lis Pendens, the Latin word for “a suit pending”. The complaint details the amount of debt, the borrower’s default on the debt, and the amount owed. The court is asked to allow the lender to foreclose on the home and take possession of the property as a remedy for the borrower’s non payment.
The home owner is served notice of the complaint and is permitted to dispute the claim and present counter claims that payments were not made. If the court determines that the borrower has a valid claim a trail is held to determine if the foreclosure should occur. However in the vast majority of cases the lender’s foreclosure action is undisputed since the borrower is in default and can not offer any facts to the contrary.
If the court determines that the borrower did default, and that the debt is valid, a judgement is issued in favor of the lender for the total amount owed including court costs. The court will establish the total amount owed based upon an affidavit from the lender itemizing the amount due.
The court will authorize a sheriff’s sale of the property, which is an auction of the property which must be held in public. Procedures for sheriff sales vary from state to state, but the property will be sold to the highest bidder. In most cases the lender is the highest bidder for the property and they take title and then are able to sell the home. At this point the home becomes a real estate owned (REO) property.
Pennsylvania is among the 22 states in the country that use the judicial foreclosure process.
Non-Judicial Foreclosure
The requirements for non-judicial foreclosure are established by state stature with no court supervision, and vary greatly from state to state. The lender informs the borrower that they are in default and typically a Notice of Default is recorded. The home owner may cure the debt within a mandated period. If the debt can not be satisfied in the specified time frame the lender records a Notice Of Sale. The timing issuance of the notices vary from state to state.This notice is generally also published in area newspapers and legal publications. After the notice time has expired the property goes to public auction and as in the case of judicial foreclosure, the property is sold to the highest bidder.
This process is typically must faster than in states that conduct judicial foreclosures.
Wallingford PA Real Estate – Wallingford, PA 19086
