Disclaimer: This video is designed to be educational and informative, but it is not legal advice. Collection law is constantly evolving and subject to change. Each situation is unique, and each case should be addressed to fit the unique situation.
You’ve decided that a loan has gone bad and are sending it to the attorney to start the foreclosure process. How long is it going to take? Well, like anything, it depends.
All foreclosure cases require the filing, service and answer of a complaint. That process is approximately 30 days. Assuming that the borrower has not answered the complaint, and are therefore in what is called “default”, the attorney can file a motion for default judgment and have a hearing.
Depending on the county and the judge’s calendar, that will occur within the next 30 days. What happens after that is the large variable.
After a lender obtains judgment, the foreclosure goes into a redemption period, which is the borrower’s opportunity to pay their debt in full and retain the property. The length of the redemption period varies depending, mainly, on the classification of the property.
If the property is homestead property, the redemption period is either 6 months or 12 months. If the property is non-homestead, the redemption period is either 3 months or 6 months. There are a few classifications within each of these, but these are the very basic differences.
The short vs. long redemption periods—meaning 6 vs. 12 or 3 vs. 6—depends on whether the lender has chosen to waive or preserve its deficiency rights. Deficiency rights are the lender’s ability to recover any shortfall of the borrower’s debt after the sale of the foreclosed property from the borrower’s other assets.
If the lender chooses to waive deficiency, it receives the shorter redemption period (the 3 or 6 months depending on the classification of the property). If the lender decides to preserve its rights to deficiency, it receives the longer redemption periods.
After the redemption period ends, the foreclosure may go to sheriff’s sale and then a confirmation of sale. That process may take another 30 days.
So, in a foreclosure, you have approximately 60 days prior to judgment and redemption period and another 30 days after judgment and redemption. Then, to a large extent, the length of the foreclosure process will be determined by the redemption period assigned to the case.