Judicial Foreclosure

• The mortgagee, or mortgage lender, has the responsibility of proving to the courts that the borrower, or mortgagor, is in default on his or her mortgage payment. The lender must first try, within reason, to settle the issue with the borrower. If the efforts are unsuccessful, the lender typically passes the case on to their lawyer for legal action. The attorney usually makes an attempt to resolve the matter; if the borrower cannot bring the late payment up-to-date or make other arrangements, a lawsuit is usually filed in the county where the property is located.
  The lender must specify the amount of the default and why it is right to have the property sold and the money put toward the delinquent loan. The lender must also provide the court the facts of the outstanding loan and receive permission to sell the property. A document called a lis pendens is usually filed with the county public records office. This notice informs the public that court action is being taken against the mortgagor to collect on the defaulted loan and by selling the property.
  
  

Non-Judicial Foreclosure

• The non-judicial foreclosure process is much simpler. Where deeds of trusts are used to buy property, the sales document contains a paragraph called a power-of-sale clause. This clause gives the trustee the legal right to begin a foreclosure sale of the property used as collateral for the loan. The trustee is not required to go through a court in order to sell the property. However, they must follow state foreclosure laws and are required to communicate with the borrower, or trustor, regarding the defaulted payments. If the borrower does not respond in a reasonable time and settle the default, the lender can initiate the foreclosure process and sell the property.
  
  

Active Military Members

• The Soldiers & Sailors Civil Relief Act (SSCRA) is a law on stopping foreclosure that can be utilized by active military personnel, their family and co-signers from foreclosure. The SSCRA can put an immediate end to any foreclosure, void the sale of a property that was foreclosed on or lower the interest payment or a mortgage loan. This foreclosure law can only be applied to mortgage loan received after the commencement of active military duty.
  
  

Ending Non-Judicial Foreclosures

• If you believe you have a solid legal basis for why you should not be foreclosed on in a non-judicial state, the law on stopping foreclosures allows you to seek a court order to stop the process. Typically, the grounds are based on the mortgage lender not following the state's procedural law as required on foreclosure procedures, or the trustee did not have the legal authority to foreclose on the property to begin with. Divorce, financial problems or medical reasons are not legitimate grounds for going into court to stop a non-judicial foreclosure process.
  
  

Bankruptcy

• By filing bankruptcy, the law on stopping foreclosure requires the trustee in non-judicial states or the lawsuit filed in judicial jurisdiction to come to a halt. Bankruptcy gives the bankruptcy trustee the time to assess your situation and determine if the bankruptcy is legitimate and to formulate a plan for distributing your income and property, if applicable. Some foreclosures can be stalled for several weeks or in some cases for a matter of years.
  
  

Deed in Lieu of Foreclosing

• If you are of the opinion that it will not be to your benefit to save your property, you may be able to a deed in lieu agreement with the lender. Generally, this strategy is implemented when: the borrower is little or no equity; the mortgage payment will still be too high if you stop foreclosure; you want to avoid a foreclosure showing on your credit history; or you tried but could not find a purchaser for the property. If the lender accepts the deed in lieu, the law on stopping foreclosure will end foreclosure proceeding immediately, it will not appear on your credit rating and the lender cannot get a judgment against you for the difference between the loan and what the property sells for.