Judicial Foreclosure

Out of all of our monthly expenses—mortgage, car payment, utility bills, Jelly of the Month Club—our mortgage is by far the most costly. Sometimes, we daydream about how much more jelly we could buy if we just didn’t have to pay that silly mortgage. But because we’re smart, and because, like...how much jelly can a person really consume in a given month anyway?...we know that we have to continue to pay it. Because, if we don’t, the bank could eventually come and take our house away, leaving us on the street with nothing but our peach preserves.

Foreclosure—the process of the bank taking our house away—can be initiated one of two ways. One of those ways happens in the courts and is known as a “judicial foreclosure.” In some states, the law says that a mortgage lender needs to file a lawsuit in order to foreclose on a property. The court then decides yay or nay, and in some cases, they also decide on the debt amount needed to settle the situation.

The good news about judicial foreclosures is that the homeowner has a chance to defend himself. If he gives a good enough reason for his spotty payment history (“We needed more jelly” is probably not a good enough reason), then the judge can, in some cases, work out a payment plan to avoid an actual foreclosure.

Note to homeowners: judicial foreclosures don’t happen everywhere. In some states, lenders don’t have to go through the courts to initiate a foreclosure. They still have to give plenty of notice—and we’re probably already aware that we’re in trouble if we’re that delinquent on our mortgage payments—but the whole lawsuit-filing part isn’t necessary. It helps to know the laws wherever we decide to make our home.