Foreclosure is the dreaded outcome of a home loan gone wrong. Whether it be in a mortgage company in Utah or California, if you don’t pay your dues on time or if you stop paying the monthly principal, your lender has the legal right to foreclose your property.
This legal process goes through three phases:

  1. Pre-foreclosure – The lender of their unpaid dues notifies the borrower. They are given the opportunity to settle the balance by paying the full amount, applying for a new loan, or paying a mutually agreed upon price.
  2. Foreclosure – This step varies from state to state depending on whether they follow judicial or non-judicial foreclosure. The county clerk is informed of the property’s title being transferred back to the lender. The property is then auctioned to the highest bidder.
  3. Post-foreclosure – At this stage, the lender has taken full control of the property, and it is taken in possession by the REO (Real Estate Owned) department or the new homeowner who won the bidding for the property at the auction.


There are three types of foreclosures.


Judicial Foreclosure

This is legal in all fifty states. The lender files a civil lawsuit against the loan borrower and the entire process is handled in court. Judicial foreclosure can further be divided into two categories; (1) foreclosure by sale which puts the property up for auction to the highest bidder and (2) strict foreclosure where the court decides a date upon when the borrower pays the loan, and if the borrower fails to pay the mortgage, the property is then awarded to the lender as collateral.


Non-judicial Foreclosure

Sometimes referred to as statutory foreclosure, this process allows the lender to advertise the borrower’s property and auction into the public without having to get the court involved. A primary provision for non-judicial foreclosure is that the borrower agreed to the process when they signed up for the loan. Non-judicial foreclosure begins with the lender sending the borrower a notice of default from the county recorder’s office. Suppose the borrower is unable to pay the mortgage, a second notice is sent 30-120 days later, the notice of trustee sale.


Zombie foreclosure

This happens when the borrow vacates from the house thinking that the borrower took full control of their property. This is usually the result of a misunderstanding. When the title of a property in zombie foreclosure stays in the name of the original lender, who was not aware that the foreclosure didn’t push through, it is known as a “zombie title.”

Foreclosure can easily be avoided if you choose the right home loan and the right place to buy your home. There are low mortgage rates in Utah; this is an option that you may want to consider. For more information on mortgages or foreclosure of properties, feel free to contact CLG, a lending company based in Salt Lake City.