• Lenders must follow state guidelines when foreclosing on mortgages.Justice image by MVit from Fotolia.com
  
  A real estate foreclosure occurs when a lender legally evicts a homeowner who has defaulted on the home loan attached to a home. While foreclosure may seem like a simple procedure on its face, there are steps each lender must take when seizing property. In the United States there are two types of foreclosure: judicial and non-judicial. Each is tied to state laws, which must be followed for ownership of a property to be legally transferred.
  
  

Judicial Foreclosure

• In states where judicial foreclosures are required, a series of court proceedings are held and the entire process must be processed through the courts. In a judicial foreclosure, a judge must allow a borrower to bring his account current and have his day in court. Through a series of hearings, the court then will determine if a borrower is in default. If a borrower loses his case, ownership of his property is transferred to the lender and he must vacate within a specific period of time.
  
  

Non-Judicial Foreclosure

• A non-judicial foreclosure involves a deed of trust containing a power of sale clause. A power of sale clause allows a lender to begin a foreclosure process without going to court. During the stages of a non-judicial foreclosure, a lender must publish a foreclosure notice in a registered newspaper for a specific period, usually three consecutive days or two weeks. State laws also require each lender to notify homeowners of the publications and foreclosure proceedings. After a borrower is properly notified by mail and they do not respond, a lender has the right to obtain the property and exercise the power of sale clause.
  
  

Real Estate Auctions

• In a non-judicial foreclosure proceeding, a real estate auction must be done by a trustee, the entity that holds a deed of trust. Trustees are commonly title companies which act on behalf of lenders. When a sale is complete, the buyer obtains ownership of the property. In a judicial proceeding, the court, after it deems a borrower to be in default, grants the lender ownership of foreclosed property. An auction may be held after a sale notice is published in the legal section of a newspaper. Most states require notices to be published one to three weeks before an intended foreclosure sale.