The speed at which a lender is able to complete the foreclosure process largely hinges on the state and the type of foreclosure. The state and type of foreclosure determines the length of a commercial foreclosure – a process that may take anywhere from a few months to years.
Lenders, of course, hope that things go smoothly and that they can regain their assets as soon as possible. Some common delays to the foreclosure process might be due to incomplete, incorrect, or missing documentation, or delays when auctioning the property. However, assuming that everything goes smoothly, how long should the process take? Your particular state laws may determine the answer.
Judicial vs. Non-Judicial Commercial Foreclosure States
States that follow a non-judicial foreclosure procedure can move through the foreclosure process fairly quickly because a lender’s claim is not forced to go through the courts. Foreclosures that follow the judicial foreclosure process, however, may take anywhere from months to years, as lenders must make a claim to the court.
Nevada, California, Texas, and Arizona have both judicial and non-judicial processes. In states where both are permitted, lenders may tactically choose their process. There are pros and cons associated with each procedure.
Judicial Commercial Foreclosure
Judicial foreclosures take the longest to complete, but come with the benefit that lenders are able to recover the full deficiency amount of their loan, whereas deficiencies are not recoverable in non-judicial foreclosures. In all four of the states in which Total Lender Solutions operates, the judicial path is the least popular.
Steps in a judicial foreclosure process allow time for a borrower to redeem the property before the eviction process can continue. When a borrower fails to make payments, the bank sends a lawsuit to the courts. The court sends the borrower a notice, and the borrower has a chance to respond. If the borrower has a complex defense, this may make the process longer. The bank has the right to evict after the judge passes favor to the bank. This process may last anywhere from twelve to eighteen months or longer.
Non-Judicial Commercial Foreclosures
Non-judicial foreclosures are more common, as they are cheaper and faster than judicial foreclosures. In a non-judicial foreclosure, a bank is allowed to auction a home once the right sequence of notices has been issued. This process moves more quickly than judicial foreclosures — sometimes only lasting months.
Some states have the right-to-redeem, and in some states, lenders may be able to recover their deficiencies through an added deficiency judgement.
Double Tracking
In some cases, a lender may try dual tracking, in which a lender files for both a judicial and nonjudicial foreclosure at the same time. This gives the lender time to evaluate which might be the best course of action. Ultimately, in states with one-action laws, like California, a lender may only file to completion under one type of foreclosure.
Keep Your Team Educated About Foreclosure Law
At Total Lender Solutions, we pride ourselves on being a resource for the lending community. For over 15 years, our team of highly experienced real estate professionals and legal experts has transformed complicated processes into clear resolutions for institutional and private lenders. We work as a vigorous extension of your team to provide comprehensive solutions and seamless communication, from pre-foreclosure and notice of default to the final sale phase. Our dedication and persistence when it comes to the foreclosure process ensures that our clients feel confident in reaching a successful outcome. Contact us today.
