Bank Owned Home

Common Types of Foreclosure


Ever since the bursting of the U.S. housing bubble, there has been a surge in the use of the words “foreclosure” and “bank-owned housing.” Foreclosures occur when a homeowner stops making payments on their house and the bank or lender decides to seize the property to cover the remaining amount that it’s owed. These houses sometimes come with issues or are not up to code. A positive thing about these foreclosed homes is that they usually sell for far below the market value and are a great way to make a profit. The foreclosure process varies by state. Below we explain the two common types of foreclosures that turn a property into a bank-owned home.

Non Judicial

This is the type of foreclosure process commonly used in California, Texas, and Michigan. This type of foreclosure only happens when the bank or lender is given the “power of sale” for the house. They call this foreclosure “non judicial” because the bank does not need a court order to sell your home. This is the faster foreclosure process. In a non-judicial foreclosure, the bank is only required to send one or two notices before selling the home in an auction.


The judicial foreclosure is allowed in all states. This occurs when the bank or lender files a lawsuit against the borrower. These foreclosures are usually handled entirely by the court which is why they’re called “judicial.” Once everything has been settled, the court will usually hand ownership of the property to the lender which will then be sold at an auction. One positive thing about the judicial foreclosure is that the borrower has the right to try and reclaim the home.

As mentioned above, check with the foreclosure regulations in your state so you know what to expect when dealing with a bank-owned home. If you are interested in purchasing one of these homes, go on-line and request a local bank-owned home listing today!