Elements Of “Non-Judicial” Foreclosure
The Non-Judicial foreclosure process can be scary and overwhelming. This article will cover the general and basic information concerning non-judicial foreclosures.
Non-Judicial Foreclosure
Non-Judicial foreclosure is the process by which your mortgage lender, under the specific and express terms of your mortgage, claims a legal right to your property and sells your property at a public auction without a formal judicial hearing or proceeding.
Since the courts do not administer the foreclosure process in a non-judicial foreclosure state, the authority and responsibility lie with the trustee, who must follow the rules governing your state’s foreclosure and sale process.
The significant advantage of the non-judicial process is that the mortgage lender, in most cases, is not permitted to pursue a deficiency judgment against you if your property sells for less than the amount you still owe on your home loan.
A non-judicial foreclosure starts when the trustee, at your lender’s request, prepares and mails to you a legal document known as a “Notice of Default and Election to Sell.”
Written Notice of Default and Election To Sell
This document is your official notice that because of your non-payment and default, a non-judicial foreclosure process has commenced and that the lender intends to proceed with selling your home. The proceeds of such a sale will be used to pay off your loan with the lender.
In most cases, the non-judicial foreclosure process will take between two to four months to complete leading to the sale of the property. This period is your window of opportunity to attempt to stop the foreclosure process.
You should know that the period could turn out to be longer if the trustee fails to comply with the terms of mortgage documents entirely or if the trustee violates any of the many rules governing the foreclosure process in your state.
Notice of Default and Election to Sell
The trustee must comply with the laws governing recording, mailing, posting, and publishing the Notice of Default and Election to Sell. However, in some cases, there is no legal requirement that you receive “actual” notice of foreclosure.
Most courts rule that foreclosure is valid so long as the trustee carries out the notification procedures in compliance with your state’s law. This stands, irrespective of whether you could not learn of the notice because you were out of the state or engaged in other matters.
However, there is a reinstatement period that will allow you a final opportunity to stop the foreclosure process from going to sale.
Non-Judicial Foreclosure Reinstatement Period
Depending on your specific state law, reinstatement typically commences upon mailing the Notice of Default to your home and ends sometime before the trustee’s sale of your property.
The critical feature of the Reinstatement Period is that it provides you with a way to stop the foreclosure process by bringing your mortgage payments fully current again. The lender may also request that you reimburse them for attorney and trustee fees that they incurred in the foreclosure process.
Reinstatement in Non-Judicial Foreclosures
You should contact the trustee immediately and inform him of your intention to reinstate and bring your loan current. You will first need to obtain the exact amount you will need to pay from the trustee to get your loan current again.
The trustee, by law, must provide you with this information promptly. Should you pay that amount to the trustee, he must, by law, immediately stop the foreclosure process.
You should then receive the trustee’s notice of termination of foreclosure, which is your proof that the foreclosure proceedings have ended. The notice should also be officially recorded to protect your title to the property.
Partial Repayment in Non-Judicial Foreclosures
Most lenders will NOT accept partial payment within the reinstatement period. However, you should consider this option if your lender is open to it and agrees to postpone the foreclosure.
You can convince the lender of your ability and intention to bring the loan payments current again.
Be careful, though. You don’t want to be making partial payments if you think you will not be able to bring your payments current again. You could end up losing more money and still end up getting your home foreclosed.
It is essential to be both realistic and candid with your lender. Also, keep in mind that partial payment will not by itself operate to extend the reinstatement period or terminate the foreclosure process. To accomplish these concessions, your lender must agree expressly and in writing.
Notice of Trustee Sale in Non-Judicial Foreclosures
After the Notice of Default is issued, assuming you have not brought your loan current during the reinstatement period, the trustee will give a Notice of Trustee Sale.
The purpose of this document is to notify you and others of the exact time and date your property will be put up for sale by auction. The date of sale is typically about two to four weeks after you first received the Notice of Trustee Sale.
You might be able to stall the process by a few weeks if you notice any material inaccuracies in the Notice of Sale and you communicate the same to the trustee in writing.
Material Inaccuracies in Non-Judicial Foreclosures
Remember, if you are in a non-judicial foreclosure state, the law requires that the trustee complies with strict procedural guidelines and requirements, or the sale could be later held to be invalid.
In this regard, you might be able to delay the sale of your home by a few more weeks if you determine there are material inaccuracies in the document or a defect in the notice requirements. However, you must promptly communicate the same to the trustee in writing before the date set for the sale of the property.
Material Inaccuracies in the Notice of Trustee Sale
The trustee’s failure to accurately identify the specific location and time where the auction will be held can be fatal to the sale.
Be aware that an actual street address in some states need not be included in the document so long as it otherwise contains sufficient information to identify the property.
The trustee must provide timely notice of the sale by having the date of sale not more than twenty calendar days after issuing the Notice of Sale to the homeowner. Be advised that the notice requirements might differ in your state, so be sure to seek the advice of an experienced real estate lawyer in your area.
The Essential Notice requirements
- The Notice of Sale must be duly mailed to you.
- The Notice of Sale must be duly published.
- The Notice of Sale must be duly recorded.
- The Notice of Sale must be duly posted.
Foreclosure Defense Lawyers
Consider consulting with a foreclosure defense lawyer as early in the process as possible.
