Judicial and Non-Judicial Process Summary

Mortgage Judicial Foreclosure

1) Borrower Defaults

2) File Complaint (Initiate Law Suit)

3) Record Lis Pendens

4) Court Hearing Date set for Sale

5) Advertise the Sale

6) Sell to highest bidder Buyer pays cash at sale.

7) Buyer receives Certificate of Sale

8 ) Period of Statutory Redemption (Right of Redemption)

9) Sheriff’s Deed Conveyed to Buyer Evict Mortgagor

10) Possible Deficiency Judgment

Trust Deed Non-Judicial Foreclosure

1) Borrower Defaults

2) Beneficiary authorizes Trustee to proceed with Foreclosure

3) Record Notice of Default

4) Period of Equitable Redemption Trustor can reinstate

5) Advertise the Sale

6) Sell to highest bidder Buyer pays cash at sale.

7) Trustee conveys Trustee’s Deed to Buyer

8 ) Deficiency Judgment Unlikely

Title Theory vs. Lien Theory: In a Title State, the lending institution holds title to the property in the name of the borrower through a Deed of Trust. In a Lien State, the deed stays with the borrower (mortgagor), and the lender (mortgagee) places a lien on the property using the mortgage instrument. Generally, foreclosure in Title States occurs through a non-judicial proceeding, while Lien States are conducted via judicial methods; however it varies with each state.

Both Washington DC and Virginia are Title States.  A Trustee’s sale is the only type of allowable foreclosure sale in DC and is more common than a Sherrif’s/Judicial sale in Virginia.  Please note: There is NO right of redemption once the property has been foreclosed (meaning the bank becomes the owner) in either of these jurisdictions.