There could be few things worse than losing your home. But rising debts and delinquent payments combined with the current economic meltdown have made foreclosures a common practice in real estate today. It therefore pays to know more about the different types of foreclosures possible and the procedures and time frames involved. While these might vary from state to state, there are largely three types of foreclosure processes, each with different results:

Judicial Foreclosure

Foreclosure by judicial sale also known as judicial foreclosure involves a court supervision of the sale of the mortgaged property. Once it is established that there is no way that the buyer can repay the loan, the lender then files a complaint in court. The homeowner is informed of this through mail or direct service and receives a chance to plead his position in court. If the debt still stands, the sale of the property is overseen by the court. The proceeds of the sale or auction are used first to satisfy the mortgage; then other lien holders; and, finally, the mortgagor/borrower, if any proceeds are left. Usually judicial foreclosure is a long process.

Power of Sale or Non-Judicial Foreclosure

If the ‘power of sale’ is given to the lender in the mortgage deed of trust, non-judicial foreclosure can take place. This procedure does not involve the court and is a relatively faster procedure than judicial foreclosure.

When a buyer cannot pay back a loan over a certain period of time, he/she is informed through a mail or a default letter about the beginning of the non-judicial foreclosure procedure. He/she will receive a Notice of Sale in case the default cannot be paid. This notice also gets published in all legal publications of the area. As in a judicial sale, the mortgage holder and other lien holders are the first and second claimants to all proceeds from the sale of the house.

Unless you have a lot of equity in your property, you should not opt for a foreclosure by sale. Equity in a property means what you actually own part of the property and is an important factor in deciding whether to seek a foreclosure by sale or a strict foreclosure.

Strict Foreclosure

Strict foreclosure is available in a few states including Connecticut, New Hampshire, and Vermont. This type of foreclosure is found when the value of the property is less than the debt. In such a foreclosure, the judge will set a series of "law days." After your law day is over, you automatically lose all rights to your property. Law days depend on the case judge and can be assigned as early as 3 weeks or as late as 9 months or longer. 

Foreclosure can be avoided by redeeming the mortgage or debt. But remember that this amount will also include attorney's fees and court costs. Redeeming can be done by selling the house yourself or by borrowing the money from another lender.