Foreclosure Q&A

What is Foreclosure?

The legal process by which a lender will terminate an owner’s rights to a property and sell it in order to satisfy a debt that is in default.

What is a non-judicial foreclosure?

The legal process whereby a lender or lien holder will sell property to satisfy a debt secured by a trust deed or mortgage in the event of a default.

What is a judicial foreclosure?

Judicial foreclosure involves a mortgage and a court process to foreclose.

How long does a non-judicial foreclosure take in the state of Utah?

The non-judicial process in Utah can move as quickly as 4.5 months.

Foreclosure timeline in the state of Utah:

  1. Default occurs at 30, 60 or 90 days.
  2. The lender files a notice of default at the county recorder’s office (notifying the public) and mails a copy to the homeowner.
    1. If lender substitutes a new trustee at this point (sub-trustee) to continue the foreclosure process, it will add up to two weeks before the NOD (notice of default) and (sub-trustee) substitution trustee are filed.
  3. If the default is not cured within 90 days of the recorded notice of default:
    1. A notice of trustee’s sale will be sent to the homeowner.
    2. The notice will be recorded at the county recorder in the same county as the property resides.
    3. It will be posted in other public places once a week for three consecutive weeks. For example, it will be advertised in an area of legal publications (newspaper) for three weeks once a week.
    4. The last publication needs to be at least 10 days, but not more that 30 days before the date of the trustee’s sale.
    5. The Lender or Trustee must post the notice of sale in a conspicuous place on the property at least 20 days before the trustee’s sale is scheduled.
  4. Not more than 20 days after the posting on the property and the last publication, a trustee’s sale will be held and the property sold to the highest bidder. The highest bidder will pay $5,000 down and the balance within 24 hours. A lot of the time, this will be the lender, who will bid either the minimum debt bid or a specified bid that is a higher price than what anyone is willing to bid at the auction. A trustee’s deed will then be transferred to the new owner.
  5. If the previous owner has not yet moved out at this time, the new owner will request a writ of restitution from the courts. The writ of restitution will then be sent to a sheriff, who will show up and physically remove the homeowner form the property and change the locks. Any belongings still in the property will be moved and stored for 30 days. The homeowner can get back her items but must pay for reasonable moving and storage fees.

View Foreclosure timeline in Utah here.

What is Pre-Foreclosure?

A property that has a lender or lien holder that has begun the first step in the foreclosure process.

Will the lender accept mortgage payments or partial payments during the foreclosure process?

No. Most likely they will not unless you are able to negotiate some sort of aggreement to reinstate  or partially reinstate your loan.  This will depend on who the investor for the loan is.

What is reinstatement?

An agreement you can reach with your lender to bring your loan current and out of the default status and foreclosure process. In Utah you have 90 days from the notice of default to do this. You can pay all past due payments including late fees, legal fees etc.. without your lenders permission and force the loan back to a current status. Or you can negotiate a forbearance agreement or loan modification.

What is REO?

An acronym that means-Real Estate Owned by the bank.

What is a Deed?

A legal document that will convey “title” to a property

What is Title?

Title is a concept of ownership in real estate, the evidence of which is shown in the deed.

What is a Trust Deed?

The security agreement your lender will use to lien your property.

What is a Mortgage?

A legal document that you give your lender in exchange for a loan. This would allow them to lien your property in exchange for the money. In the state of Utah, 97 percent of the time you will actually give them a trust deed in exchange for a loan, but we still call it a mortgage. And, yes, you are actually giving it to them, and not vice versa.

What is a Note?

The terms in which you gave a mortgage or trust deed to the lender. The note is secured to the property by the trust deed.

What is a Trustee?

Basically, this is a lawyer or title company who is appointed at the time you gave your mortgage to the lender, who is given as a third party certain rights on behalf of the lender. One of these rights is the power of sale in the event you do not meet the terms of the note.

What is a Sub-Trustee?

Many times, as soon as the trustee will actually have to do something he will substitute a new trustee who specializes in handling the foreclosure.

What is an Authorization Form?

Your lender will require anyone who is not on your loan paperwork to have authorization from you in writing to discuss or negotiate any details of your loan.

What is an Auction ?

The public sale of property to the highest bidder. In my opinion, a TRUE auction will be binding on all parties. Some brokers hold “fake” auctions that are subject to a third-party approval, which is more of a “marketing party” than an auction.

What is a Trustee Sale?

When a lender exercises the power of sale in the trust deed and instructs the trustee to follow all the required steps of foreclosure and auction off or sell the property.

What is the Power of Sale?

The power that a trust deed grants to a trustee or mortgagee to sell the secured property if the borrower defaults according to the terms of the trust deed or note without judicial proceedings. They just have to follow the rules the state has set up. That is why it’s important that you know what they are.

Federal or state property tax, mechanic’s liens and homeowner’s associations sometimes also have the power of sale.

What is a NOD, or Notice of Default?

To follow all the rules of foreclosure in the state of Utah, the trustee, on behalf of the lender, must file a notice of default with the county recorder in the county the property is located. See foreclosure timeline.

What is Collateral?

The security that you pledge to the lender that secures your loan. This includes the property, land and everything physically attached to the property as defined in your trust deed at closing.

What is a Lien?

An attachment to the “title” of a property. Such as a mortgage, first trust deed, second trust deed, mechanic’s lien or tax lien, etc. … All liens must be satisfied one way or another to transfer a clean title to your property.