The difference between Judicial and non-Judicial states

Is your state a judicial or a non-judicial state?

Recently we posted a map showing Judicial and Non-Judicial states. originally published by the KCM blog. It's no coincidence that those same states the KCM identifies as judicial states are the same states that are identified as the states with the highest shadow inventory. These states are Connecticut, Delaware, Florida, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Nebraska, New Jersey, New Mexico, New York, North Dakota, Ohio, Pennsylvania, South Carolina, and Vermont. 

In none-judicial states, the lenders file a Notice of Default with the county recorders office to begin forelosure, but the process does not need to go through the courts.These states are Michigan, New Hampshire, Tennessee, Utah, Washington DC, and West Virginia.

The remaining 25 states allow both judicial and non-judicial foreclosure.

In judicial states, foreclosures must be handled through the court systems, resulting in a longer time before the home can be sold. The court backlog is the reason for the high shadow inventory in states like NJ.

What can we do? Not much. Eventually, the shadow inventory will be released and then the market will be able to stabilize. But, in the mean time, it is absolutely critical that your short sale be handled by a real estate professional who understands the process and the market.