DEFINITION of 'Judicial Foreclosure'

Foreclosure proceedings in which a mortgage lacks the power of sale clause. In such an instance, many states require the foreclosure to be processed through the state's courts. If the court confirms that the debt is in default, an auction is held for the sale of the property in order to acquire funds to repay the lender.

This differs from non-judicial foreclosures, which are processed without court intervention.

BREAKING DOWN 'Judicial Foreclosure'

Many states require judicial foreclosure to protect equity the debtor may have in the property. Judicial foreclosure also serves to prevent "strategic disclosures" by unscrupulous lenders.

In instances where the sale of the property through the auction does not generate enough funds to repay the mortgage lender, the former homeowner will still be held liable for the remaining balance.

RELATED TERMS
  1. Serious Delinquency

    When a single-family mortgage is 90 days (or more) past due and ...
  2. Foreclosure Crisis

    A period of unusually high home foreclosure rates that caused ...
  3. Foreclosure Buyout

    A refinancing program that allows a homeowner to avoid foreclosure ...
  4. Decree Of Foreclosure And Sale

    A declaration made by a court indicating that a piece of property ...
  5. Zombie Foreclosure

    A situation (or a home in this situation) that occurs when a ...
  6. Power Of Sale

    A clause written into a mortgage authorizing the mortgagee (lender) ...
Related Articles
  1. Investing

    Helping Clients Navigate Short Sales And Foreclosures

    Both buyers and sellers can benefit from a real estate professional experienced in dealing with short sales and foreclosures.
  2. Investing

    Don't Get Trapped in a Zombie Foreclosure

    Understand how foreclosures work and you can avoid the disastrous consequences of having a zombie foreclosure.
  3. Investing

    The 6 Phases Of A Foreclosure

    For many, foreclosure is still a real possibility. Make sure you're prepared and know the steps.
  4. Investing

    What Is A Short-Sale Property & How Does It Work?

    A short sale is an alternative to foreclosure whereby indebted owners get permission from a bank to sell their house for less than amount of the mortgage.
  5. Investing

    Avoiding Foreclosure Scams

    If you want to save your home, avoid bogus offers and take matters into your own hands.
  6. Investing

    Saving Your Home From Foreclosure

    Learn the tactics you can use to prevent your home from being repossessed.
  7. Investing

    5 Ways To Buy A Foreclosed Home

    There is no shortage of foreclosure properties. Find out how you can buy one for yourself.
  8. Investing

    How To Delay Foreclosure

    While losing a home can be a traumatic event for you and your family, it's best to find ethical means of delaying or avoiding foreclosure, even if it takes more time.
  9. Investing

    The Lowest Foreclosure Rates In America

    Despite more foreclosures and a high unemployment rate, signs of life are emerging in the U.S. real estate market.
  10. Investing

    Top 6 Scariest Neighborhoods For Homebuyers

    If you're looking for a spooky spot this Halloween, these communities boast the most horrifying foreclosure rates in the country
RELATED FAQS
  1. What is Foreclosure Investing?

    Foreclosure investing, despite the promises of late-night television infomercials, is not for the inexperienced. Read Answer >>
  2. My mortgage payments are no longer affordable; is there anything that I can do to ...

    The most important thing for you to remember if you find that you may not be able to make this month's mortgage payment is ... Read Answer >>
  3. When Is Mortgage Insurance Typically Required?

    Learn about the situations in which borrowers may be required to buy private mortgage insurance, and discover who this insurance ... Read Answer >>
Hot Definitions
  1. Down Round

    A round of financing where investors purchase stock from a company at a lower valuation than the valuation placed upon the ...
  2. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  3. Portfolio Investment

    A holding of an asset in a portfolio. A portfolio investment is made with the expectation of earning a return on it. This ...
  4. Treynor Ratio

    A ratio developed by Jack Treynor that measures returns earned in excess of that which could have been earned on a riskless ...
  5. Buyback

    The repurchase of outstanding shares (repurchase) by a company in order to reduce the number of shares on the market. Companies ...
  6. Tax Refund

    A tax refund is a refund on taxes paid to an individual or household when the actual tax liability is less than the amount ...
Trading Center