Does the Homeowner Go to Court for a Foreclosure?

You don't have to go court if your home is in foreclosure. A court isn't even involved if your lender uses non-judicial foreclosure. Whether you should go to foreclosure hearings or even start a case of your own depends on your personal circumstances. If your lender made a mistake, for example, you should go to court to stop the action. But if you're not paying your mortgage and know you can't afford to, going to court probably won't stop the foreclosure.

The lender must take you to court in a judicial foreclosure. You'll receive notice of the case in writing and have the right to appear at the first hearing to answer the lender's claim. If you don't show up to the hearing or file an answer in court, the judge will allow the lender to go ahead without you, although you'll still receive case papers. Judicial foreclosures usually take months, but times vary by state. States that only use judicial foreclosure include Kansas, Iowa and Pennsylvania.

Lenders don't take you to court in a non-judicial foreclosure. Some states, such as Utah and Texas, only use non-judicial foreclosures. If a deed of trust secured your home loan, the lender doesn't need to go through court to get the property back. On the deed of trust, you gave ownership of the home to a third party, the trustee. The trustee holds the property until you pay your loan off and can deed the property back to the lender or new owner after the public foreclosure auction. You authorized the lender to foreclose if you stopped paying on the deed of trust you signed. If you want to fight a non-judicial foreclosure, you have to file a lawsuit against the lender as soon as possible after you get notice of their intent to foreclose.

Some states offer homeowners a court mediation opportunity in judicial or non-judicial foreclosures. For example, in New Jersey, a person with an eligible property can request court mediation with the lender anytime before the court gives the lender a judgment of foreclosure. In Nevada, a non-judicial foreclosure state, homeowners may request mediation but must do so within 30 days of receiving a foreclosure notice.

You can work out a solution with the lender outside of court whether you're going through a nonjudicial or judicial foreclosure. For example, if you can pay all the past due money you owe on the loan plus other fees the lender is requesting, such as legal costs, the lender may agree to stop the foreclosure and reinstate your loan. If you're going outside of court to stop the foreclosure, you must have everything from the lender in writing so you have proof of the agreement should the lender not follow through.