Video Transcript:
What is the difference between a judicial state and a nonjudicial state in terms of mortgage recording? This is Dave at TitleSearch.com. You may hear the term a judicial foreclosure, nonjudicial foreclosure. What that determines is, if a mortgage recording in that state is done by a deed of trust or an actual mortgage. When there's a deed of trust, what happens is the property is actually deeded to a trustee where the ownership of that property is transferred to a trustee who holds that deed, holds that ownership in trust for the mortgage the borrower and the mortgagee -the borrower and the lender -until the mortgage is paid off. And then they release it to the borrower who is now the homeowner. That's what's called a nonjudicial state. In a judicial state, it's actually done through a mortgage where the borrower owns the property, but they have a pledge of a mortgage. In that case, if there's a foreclosure, it has to go through the court system; a judicial system. It's a judicial foreclosure. So if you have to foreclose on a mortgage, you have to go to court, file a lawsuit, have the court issue a judgment against the borrower for breach -for default -and then you repossess the property. Usually, those are sold at the courthouse steps at auction. In a deed of trust or nonjudicial foreclosure, the trustee simply deeds the property to the bank, and that doesn't have to go through the court system. Different states have different statutes and traditional ways they handle foreclosures. In some states, you can either do one or both or one or the other. But usually there's one that's preferred over the other in a state. Do have questions about a judicial or nonjudicial foreclosure or even how to run a title search to encompass those, you can reach us at our website at title search dot com.