February 15, 2019
How Are Judicial Foreclosures Beneficial to Borrowers?
Foreclosure is not a word one regularly considers when pondering positives for borrowers in real estate. Yet there are a number of different routes that foreclosure may take. Which set of regulations a lender must abide by can be a strong determinant in the rate at which foreclosures take place and the fashion in which they are performed. This is generally determined by the legal regime one finds in a given state. Today we are taking a peek at the regime of judicial foreclosure.
While states requiring judicial foreclosures, like our service state of Florida, do face some negatives from the practice—such as foreclosures costing more than they do in states where judicial foreclosure is not required, and a likely increase in the number of zombie foreclosures—there are nonetheless some upsides to the practice from the borrower’s perspective.
First of all, in states that mandate judicial foreclosures, lenders have a higher bar to contend with in choosing who will be supplied with a home loan. Being aware that any move to foreclose will require judicial review prompts lenders to make more cautious decisions up front, resulting in overall fewer subprime loans being made on offer. This is underscored by the fact that in this sort of regulatory matrix, lenders may not pass along extra costs incurred in foreclosure to buyers.
Moreover, lenders must be conscientious about getting all their ducks in a row where it comes to initiating foreclosure proceedings when judicial review awaits them. In jurisdictions where judicial foreclosure is uncommon, lenders feel less pressure to be certain they are taking all of the correct regulatory steps prior to foreclosing on a property.
On top of all this, the extra time that judicial foreclosure takes allows borrowers to remain in the home for a longer period of time from when proceedings are initiated, granting them much-needed time to get their own situations sorted out, and offers a built-in forum in which borrowers may contest loans whose terms may be deemed predatory, or to point out that lenders have failed in their duties in some material fashion.
Whether you’re shopping around for title insurance in the judicial foreclosure state of Florida, or in the non-judicial foreclosure states of Rhode Island or Massachusetts, contact us to see how we can help. Topouzis & Associates, P.C., is backed by multiple underwriters, staffed by residential real estate specialists and ready to help you avoid costly delays and streamline your residential transactions.