What Is a Foreclosure Filing?

A foreclosure filing refers to the legal act by a mortgage lender in filing a lawsuit in court to win the right to sell the home of a delinquent mortgagor at auction. It is thus the initiation of the formal foreclosure process.

When a homeowner defaults on mortgage payments, or otherwise fails to fulfill the terms of the mortgage agreement, the lender can enforce its rights through the foreclosure process. The process of foreclosure is regulated by state laws, and the rights and obligations of both the borrower and lender can vary widely from state to state.

Key Takeaways

  • A foreclosure filing begins the legal foreclosure process by a mortgage lender by submitting the proper paperwork with the court.
  • Depending on the jurisdiction, the result may be a judicial or non-judicial foreclosure proceeding.
  • In non-judicial states, the actual filing process may be abbreviated or unnecessary.

Understanding Foreclosure Filings

There are two main types of foreclosure filing: judicial foreclosure, in which the lender must file a foreclosure suit in court in order to be allowed to resell the home, and non-judicial foreclosure, wherein a lender doesn’t need to seek court approval. Whether or not your mortgage lender will have to file a judicial foreclosure depends on the laws of your state.

In states with judicial foreclosure, there are typical steps that a mortgage lender must take before it can file a foreclosure suit in court. In New York State, for instance, the bank must first send a delinquent borrower an acceleration letter, which states its intention to accelerate the mortgage, if the borrower does not get current on their loan by a certain date. To accelerate a mortgage means to require that a borrower pay the entire amount due at once. An acceleration letter is usually sent after a borrower has failed to make their mortgage payment for three months. After sending the acceleration letter, a mortgage lender in New York State must also send delinquent borrowers a 90-day pre‐foreclosure filing notice, which must inform borrowers of at least five nonprofit legal counseling services in the borrower’s area.

Only after this 90-day period can a mortgagor file for foreclosure. In many states like New York, the delinquent borrower then has a period of time, typically between 20 and 30 days to file a response to the mortgage lender’s complaint. This response is the borrower’s opportunity to state if the mortgagor believes the foreclosure complaint has been filed in error, or if there are any other complaints the borrower has about the conduct of the mortgage servicer.

Mortgage lending discrimination is illegal. If you think you've been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take. One such step is to file a report to the Consumer Financial Protection Bureau or with the U.S. Department of Housing and Urban Development (HUD).

Foreclosure Filings in Non-Judicial States

In many states where there are laws supporting non-judicial foreclosure, the actual filing of a foreclosure suit is sometimes not necessary. In these states, banks can forgo a judicial review of the foreclosure if they included a power of sale clause in the mortgage agreement.

In these states, lenders are not required to obtain a decree of foreclosure through the court system. Instead, they may alert the borrower and the public of the foreclosure through other means. These may include a notice of default followed by a notice of sale, a decree of sale specifying an auction date, or simply the publication of a notice of sale in a newspaper. In states with non-judicial foreclosures, the foreclosure process generally operates more quickly than in states requiring a court-issued decree of foreclosure.