The Foreclosure process begins when the homeowner fails to make payments of the money due on the mortgage at the appointed time. This may be due to several reasons. Unemployment, divorce, medical challenges, terms of the loan, sick of property management, and even death.
Foreclosure is applied to any method of enforcing payment of the debt secured by a mortgage, by taking and selling the estate. Borrowers and lenders now face a challenging situation. Both seek a compromise that permits a win-win outcome. The borrower to keep his home or business, the lender to keep receiving mortgage payments.
Foreclosure proceedings typically start with a formal demand for payment which is usually a letter issued from the lender. This letter of notice is referred to as a Notice of Default (NOD). Depending on your state, the lender will issue this notice when the homeowner has been 3 months delinquent on the mortgage payments. Keep in mind that the notice is a threat to sell your property, terminate all your rights in that property and evict you from the premises.
In Utah, foreclosures are accomplished either in court or out of court, although out-of-court foreclosures are more common. The out-of-court foreclosure process takes about five months.
Pre-foreclosure Period
To begin foreclosure proceedings in court, the lender files a suit against the borrower for the amount owed. If the court finds default has occurred, it will determine the appropriate amount due on the loan and give the borrower a set time to repay the debt plus costs. If the borrower does not pay within the set time period, a public sale of the property is scheduled.
Most foreclosures in Utah can be commenced without involving the court system. The lender starts the foreclosure process by recording a notice of default with the county recorder and mailing a copy of the notice of default to the borrower. After the notice of default is recorded, the borrower has three months before the property is sold at public auction. During this time, the borrower can stop the foreclosure by paying the amount in default and any applicable costs.
Notice of Sale / Auction
Three months after the notice of default is recorded and at least 20 days before the sale date, the notice of sale is posted in a conspicuous place on the property to be sold and at the office of the county recorder. In addition, the lender publishes a notice of sale once a week for three consecutive weeks in a local newspaper. The last publication must be at least 10 days, but not more than 30 days before the date of the sale.
Foreclosure sales are conducted as public auctions at the county courthouse where the property is located between the hours of 8 a.m. and 5 p.m., with the property going to the highest bidder. If the sale price is above and beyond the amount owed to the lender, the extra monies go first to any junior lien holders and then to the borrower.
There is typically no redemption period for the borrower after an out-of-court foreclosure sale.
The following chart shows a comparison of the processes of Mortgage Judicial Foreclosure and Trust Deed Non-Judicial Foreclosure.
| Mortgage Judicial Foreclosure |
vs.
|
Trust Deed Non-Judicial Foreclosure |
| |
|
|
| 1. Borrower Defaults |
|
1. Borrower Defaults |
| 2. File Complaint (Initiate Law Suit) |
|
2. Beneficiary authorizes Trustee to proceed with Foreclosure |
| 3. Record Lis Pendens |
|
3. Record Notice of Default |
| 4. Court Hearing Date set for Sale |
|
4. Period of Equitable Redemption Trustor can reinstate |
| 5. Advertise the Sale |
|
5. Advertise the Sale |
| 6. Sell to highest bidder Buyer pays cash at sale. |
|
6. Sell to highest bidder Buyer pays cash at sale. |
| 7. Buyer receives Certificate of Sale |
|
7. Trustee conveys Trustee's Deed to Buyer |
|
8. Period of Statutory Redemption (Right of Redemption)
|
|
8. Deficiency Judgment Unlikely |
|
9. Sheriff's Deed Conveyed to Buyer
- Evict Mortgagor
|
|
|
| 10. Possible Deficiency Judgment |
|
|
Read HERE to find out what options are
available to avoid foreclosure.
