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In a state with only judicial foreclosure, is it legal for a bank to give info to a person prior to court?
November 3rd, 2011 
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Each state with a judicial foreclosure process will have its own laws and procedures so ultimately, that would depend on the laws in the specific state you are talking about .
That being said, my guess is that it is probably legal (in fact, any default would likely already be a matter of public record and I don’t think the bank could be held liable for dispersing public information). It may also be in everyone’s best interest — especially if you are in a state that allows deficiency judgments.
As an example, lets assume the foreclosure process has worked its way through the court system and the property has been sold at auction, but for tens of thousands of dollars less than what is owed to the bank (not an unlikely prospect in today’s real estate market). Lets say, for illustration that the balance owed to the bank for the defaulted mortgage and all of the attorney and related fees is $ 150,000.00, but the property sells for only $ 100,000.00 at auction. If the state allows deficiency judgments, the bank could then get a judgment against the “distressed owner” for the $ 50,000.00 difference. So even though the property has been sold, the matter is not final because the bank will want to collect on the deficiency judgment (which will probably be accuring interest and additional attorney fees, etc.). So the bank will continue taking action against the distressed owner to collect the deficiency. Those actions could include garnishing wages and bank accounts, liening other property owned, etc.
If the distressed owner can sell the property prior to the bank having to file the judicial foreclosure action or prior to the court’s issuance of a final ruling both parties may be able to avoid a difficult and expensive court action and the defaulting party may be able to avoid a significant deficiency judgment.
I work for an attorney who does judicial and non-judicial foreclosures. They are difficult and unpleasant for everyone involved. We always give the defaulting party every opportunity to cure the default before the judge enters an order and/or the property goes to auction — we’ve even had payoffs come through 30 minutes before the auction.