Judicial Sale States v. Non-Judicial Sale StatesOverall, twenty-two states utilize the "judicial sale" foreclosure method in which lenders have to use the court system to both file the actual lawsuit and hold the foreclosure sale if they win the lawsuit. The remaining twenty-eight states operate under the non-judicial sale method and permit out-of-court foreclosures.Judicial Sale StatesThe judicial sale states are Connecticut, Delaware, Florida, Hawaii, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maine, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, Vermont and Wisconsin.Non-Judicial Sale States and Deficiency JudgmentsThe foreclosure process differs in non-judicial sale states from the typical judicial sale in several ways and is generally a combination of state law and the specific requirements of the promissory note and mortgage or deed of trust, which is often used in non-judicial states.The actual foreclosure process itself can be very informal and typically consists of simple notice of default and deadlines for payment of past due balance and sale of the property unlike all of the rules, formalities and deadlines involved with judicial foreclosures. Because of the importance of your loan documents and risk of losing your home before you even understand your foreclosure rights, we strongly recommend consulting an attorney in your state with expertise handling out-of-court foreclosures and stopping foreclosure sales in non-judicial sale states. Deficiency Judgments in Non-Judicial Sale StatesA "deficiency judgment" occurs when the sale price of your home is not enough to pay off the primary mortgage. If the lender tries to collect the resulting balance and obtains a court judgment the amount due is part of a deficiency judgment which will also include attorney's fees, costs and interest incurred by the lender.Even in non-judicial sale states the only method of securing a deficiency judgment is through the court system. As a result many lenders use the courts to process foreclosures to obtain both the property and a judgment for any amount not covered by the foreclosure sale. As discussed in our Foreclosure Alternatives and Options section, avoiding a deficiency judgment is an important consideration in selecting the foreclosure solution that's right for you.
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