How Judicial Foreclosure Works: What Every Borrower Needs to Know About this Type of Foreclosure

Put simply, “judicial foreclosure” is the legal term used for a foreclosure that goes through the local court system. However, there is much more to this type of foreclosure than just knowing that courts are involved. With that in mind, we’ve created a guide to the process below. Keep reading to learn what you need to know about the judicial foreclosure process.

What is judicial foreclosure?

Judicial foreclosure is a legal process in which a lender must file a foreclosure lawsuit in court to foreclose on a property after a borrower defaults on their mortgage payments. Unlike non-judicial foreclosure, which relies on a power of sale clause in the mortgage or deed of trust, judicial foreclosure involves court oversight and requires a judge to enter a judgment of foreclosure before the sale of the property can occur. This means the foreclosure is handled by the court, and the lender cannot proceed without judicial approval.

The type of foreclosure used in a state is determined by state law, and judicial foreclosure is a legal requirement in many states. States that typically use this method include Connecticut, Delaware, Florida, Hawaii, Illinois, and Wisconsin.

In judicial foreclosure states, the foreclosure process begins when the lender files a lawsuit against the homeowner or borrower, seeking permission from the court to sell the property and recover the unpaid mortgage debt. If the court finds in favor of the lender, it will issue a foreclosure judgment, allowing the home to be sold at a foreclosure sale. This process often provides additional time for the homeowner to respond, possibly seek assistance from a foreclosure lawyer, or negotiate alternatives such as a deed in lieu of foreclosure. 

How the judicial foreclosure process works

The judicial foreclosure process is a court-supervised procedure that allows a lender to recover the balance of a mortgage debt when a borrower defaults. This legal process varies slightly depending on state law, but the general steps are largely consistent across judicial foreclosure states.

Borrower defaults on mortgage payments

The process begins when a homeowner or borrower falls behind on their mortgage payments. Under federal law, the mortgage servicer must wait at least 120 days before it can initiate foreclosure proceedings. This waiting period provides time for the borrower to seek alternatives to foreclosure, such as repayment plans or loan modifications to avoid foreclosure.

Preforeclosure notice or breach letter

During the 120-day period, the lender typically sends a notice of default (sometimes called a breach letter), warning the borrower that they’re in default and risk facing a foreclosure. This notice gives the borrower an opportunity—usually about 30 days—to cure the default by making up the missed payments plus any interest, fees, or penalties.

Filing a foreclosure lawsuit

If the borrower does not bring the loan current, the lender moves forward by filing a foreclosure lawsuit in the county where the property is located. The lawsuit—often titled a complaint for foreclosure or petition for foreclosure—asks the court to enter a judgment of foreclosure, allowing the lender to sell the property to recover the outstanding balance.

Notice of the lawsuit and opportunity to respond

The borrower is formally served with a summons and a copy of the foreclosure complaint, typically by a sheriff or process server. The borrower then has a specific period, usually 20 to 30 days, to respond to the complaint. If the borrower doesn’t respond, the court may enter a default judgment in favor of the lender.

Litigation and discovery phase

If the borrower files an answer, the foreclosure enters the litigation phase, where both parties can present evidence and arguments. This phase may involve discovery tools like written interrogatories, document requests, or depositions. Borrowers may raise defenses such as improper servicing, financial hardship, or errors in the loan documents. Legal guidance from a foreclosure attorney or foreclosure lawyer is often beneficial during this stage.

Summary judgment or trial

The lender may file a motion for summary judgment, asking the court to rule in its favor without a full trial. If granted, the court will enter a foreclosure judgment. If denied, the case proceeds to trial, where a judge will determine whether to issue a foreclosure judgment and schedule a foreclosure sale.

Foreclosure sale and possible deficiency Judgment

Once the court enters a judgment of foreclosure, the property is scheduled to be sold at a foreclosure sale, typically at a public auction. If the foreclosure sale price is less than the outstanding mortgage debt, the lender may seek a deficiency judgment—an order requiring the borrower to pay the remaining balance. However, not all states permit this, and some limit the amount that can be recovered.

Redemption period and eviction

In certain states, the borrower may have a redemption period after the sale, during which they can reclaim ownership of the home by repaying the mortgage debt and other costs. Once this period expires, or if there is none, the new owner (often the lender) may begin eviction proceedings if the former homeowner hasn’t vacated the property.

Confirmation of sale and end of process

Some states require confirmation of the sale by the court to finalize the transfer of ownership. Once confirmed, and any redemption period has passed, the foreclosure is complete.

What is the difference between judicial foreclosure and nonjudicial foreclosure?

The difference between judicial foreclosure and nonjudicial foreclosure really comes down to whether or not the lender has to go to court to move forward with the foreclosure process.

In a judicial foreclosure, the lender needs to file a lawsuit against the borrower and ask the court to enter a judgment of foreclosure. That means everything goes through the legal system—from the initial complaint to the final foreclosure sale. Once the court signs off, the property is typically sold at a public auction, either at the courthouse or online. If no one places a winning bid, the home goes back to the lender and becomes real estate owned (REO).

Now, compare that to a nonjudicial foreclosure. In this case, the mortgage or deed of trust includes a power of sale clause, which allows a lender to bypass the court entirely. Instead of a judge overseeing the case, a foreclosure trustee handles the process. After a notice of default is sent, and if the borrower doesn’t resolve the issue, the trustee issues a notice of trustee sale and moves forward with the auction. Unlike judicial sales, these don’t need to be held at a courthouse—they can take place at the property itself or another public location. Same outcome: if no buyer steps up, the home becomes REO.

Timing and control are big differentiators here. Judicial foreclosures tend to take longer, cost more, and offer borrowers more chances to fight the case. Nonjudicial foreclosures, on the other hand, are usually faster and more efficient for lenders—but offer fewer legal protections for the borrower.

Also worth noting: in either type, if the foreclosure sale price is less than the outstanding mortgage debt, the lender might pursue a deficiency judgment, depending on state law. Some states allow it; others don’t.

To make it easier to compare the two, here’s a quick reference chart that breaks it all down:

Do you get any money if your house is foreclosed?

One of the most common questions homeowners facing a foreclosure ask is: Do I get any money if my house is foreclosed? The answer depends on how the foreclosure sale plays out and what the foreclosure sale price ends up being.

Here’s how it works: when a property is sold at a foreclosure sale, the proceeds first go toward paying off the outstanding mortgage debt, along with any interest, fees, and legal costs. If the sale of the property brings in more than what the borrower owes, that extra money—called surplus funds—belongs to the homeowner. This situation isn’t common, but it can happen, especially in hot real estate markets or competitive auctions.

On the other hand, if the foreclosure sale price is less than the outstanding mortgage balance, the lender may have the right to pursue a deficiency judgment. This legal ruling allows the lender to try and collect the remaining balance from the borrower—even after the property is gone. However, whether a deficiency is allowed depends heavily on state law, and some states limit or prohibit it altogether.

In some cases, foreclosure proceedings end with the homeowner owing nothing more. But in others, a borrower may still be liable for thousands after the debt and the foreclosure sale are finalized.

Whether or not you walk away with money—or owe more—depends on the type of foreclosure used, how the property is valued, and how your state handles deficiency judgment laws. If you’re in this situation, talking to a foreclosure attorney or foreclosure law center can help you understand your rights and options. 

Frequently asked questions 

Why would a lender choose a judicial foreclosure instead of a nonjudicial one?

A lender might opt for a judicial foreclosure when the mortgage or deed of trust does not contain a power of sale clause. In such cases, the lender must file a petition for foreclosure and go through the court system. While slower, judicial foreclosure allows for judicial review, which can be advantageous if there are legal uncertainties. This method also ensures compliance with due process and may offer greater enforceability across state lines.

What is the order of foreclosure?

Foreclosure typically follows a set legal sequence. First, the borrower defaults on the loan. Then, the lender may begin the foreclosure by issuing a notice of default or filing a foreclosure lawsuit, depending on whether it’s a nonjudicial or judicial process. The next steps include notice of sale, foreclosure sale, and post-sale procedures like confirmation and redemption. In some states, this process is laid out very specifically in state statutes.

How do you clear a foreclosure?

To clear a foreclosure, a borrower can pay the mortgage in full before the sale or negotiate a reinstatement. In judicial cases, you might respond to the complaint or file for loss mitigation. If a foreclosure has already been completed, you may need to redeem the property if your state allows a redemption period. Once the redemption period expires, clearing the foreclosure typically involves improving your credit over time.

Which type of foreclosure is faster?

A statutory foreclosure—commonly known as a nonjudicial foreclosure—is generally faster because it doesn’t require court involvement. Non-judicial foreclosure means the process follows a series of legal notices rather than litigation. In contrast, judicial foreclosure refers to a longer, court-supervised process. Overall, non-judicial foreclosure typically takes less time to complete.

Who suffers the most in a foreclosure?

While lenders face financial losses, the homeowner usually suffers the most. A foreclosure means that the lender repossesses the property, resulting in the loss of homeownership and long-term credit damage for the borrower. This effect can be especially devastating if the foreclosure occurs when a mortgage is nearly paid off or during financial hardship.

What is the simplest solution for a foreclosure?

The simplest way to stop a foreclosure is to pay the mortgage before the sale date or reach a resolution such as a loan modification or deed in lieu of foreclosure. In some cases, borrowers can also seek assistance of a foreclosure trustee or consult HUD-approved counselors via the Department of Housing and Urban Development. These options can sometimes help avoid foreclosure entirely.

How do you avoid a judicial foreclosure?

To avoid a judicial foreclosure, borrowers should act early—during the 120-day pre-foreclosure window—to reinstate the loan or seek forbearance. Many states use nonjudicial foreclosure alternatives. Understanding the steps in a judicial foreclosure, including when to respond and how to negotiate, can also help prevent it. In severe cases, legal aid or contacting a foreclosure lawyer may be necessary.

What effect does a judicial foreclosure have on your credit score?

Whether it’s judicial or nonjudicial, foreclosure typically has a serious negative impact on a borrower’s credit score. A judicial foreclosure involves a lawsuit and public court record, which may be viewed more negatively by future creditors. The impact lessens over time, especially if the borrower works to rebuild credit promptly after the process ends.

How does a power of sale work?

A power of sale clause allows a lender to sell the property without going to court. It’s commonly found in a deed of trust used in non-judicial foreclosure states. Once a borrower defaults, the trustee follows a set process—issuing a notice of default and then a notice of trustee sale. The trustee conducts the sale and distributes funds, often with the help of platforms like PropertyRadar Help Center.