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. Foreclosure Filing

    The initial legal process of selling a mortgaged property that ...
  2. Voluntary Foreclosure

    A voluntary foreclosure is a foreclosure proceeding that is initiated ...
  3. Zombie Title

    A right to ownership and possession of a home that remains with ...
  4. Short Refinance

    The refinancing of a mortgage by a lender for a borrower currently ...
  5. Delinquent Mortgage

    A mortgage for which the borrower has failed to make payments ...
  6. Zombie Foreclosure

    A situation (or a home in this situation) that occurs when a ...
Related Articles
  1. Investing

    Buying Foreclosures At A Bargain Price

    Learn how to buy a foreclosed home at a discount.
  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

    Avoiding Foreclosure Scams

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

    Saving Your Home From Foreclosure

    Learn the tactics you can use to prevent your home from being repossessed.
  6. 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.
  7. Personal Finance

    Avoid Foreclosure: How To Handle An Underwater Mortgage

    Foreclosure is the biggest fear of any struggling homeowner. These tips just might save your credit rating.
  8. 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.
  9. 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
  10. Investing

    5 Ways To Avoid Foreclosure

    If you go into default on your mortgage payments, don't worry, there are still ways to save your home.
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. What’s the Difference Between a Mortgage Lender and a Mortgage Servicer?

    Buying a home is an exciting and confusing process. Once the loan is secured, it's important to know who gets the payment: ... Read Answer >>
Hot Definitions
  1. Return on Market Value of Equity - ROME

    Return on market value of equity (ROME) is a comparative measure typically used by analysts to identify companies that generate ...
  2. Majority Shareholder

    A person or entity that owns more than 50% of a company's outstanding shares. The majority shareholder is often the founder ...
  3. Competitive Advantage

    An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers ...
  4. Mutual Fund

    An investment vehicle that is made up of a pool of funds collected from many investors for the purpose of investing in securities ...
  5. Wash-Sale Rule

    An Internal Revenue Service (IRS) rule that prohibits a taxpayer from claiming a loss on the sale or trade of a security ...
  6. Porter Diamond

    A model that attempts to explain the competitive advantage some nations or groups have due to certain factors available to ...
Trading Center