It is not uncommon for lenders to wait months or even years after a borrower defaults to begin the foreclosure process. This is often for good reasons — it is financially better for lenders to get a delinquent borrower back on track than to file a foreclosure. The foreclosure process can be a daunting one to start, especially for small to medium lenders that have not enacted their first commercial foreclosure. However, as soon lenders have exhausted alternative resolution options, the best way to protect one’s assets is to begin the commercial foreclosure process as soon as possible.

What’s the First Step in the Commercial Foreclosure Process?

For lenders, the foreclosure process starts at default. At the point of default, a clock starts, which determines the timeline for when lenders may enact certain steps in the foreclosure process. The time between the borrower going into default and the issuance of the Notice of Sale, which sets the sale date, is known as pre-foreclosure.

The first piece of action that a lender takes in the commercial foreclosure process is issuing a Notice of Default, sometimes called a Breach Letter. This requires lenders to file the notice in the county where the property is located. In many states that foreclose commercial properties nonjudicially, lenders are required to post the notice publicly in the county where the property is located, inconspicuously on the property itself, and sometimes served, in person, on the borrower.

The pre-foreclosure period of nonjudicial foreclosure is crucial because it comes with its own set of compliance rules, depending on the state. Lenders should consult a foreclosure service to ensure they follow all the compliance requirements for the state of the property.

Foreclosures are complicated and time-consuming, and lenders should not enact them on their own, especially when enacting a foreclosure for the first time. In a nonjudicial foreclosure, a third party trustee enacts the foreclosure on your behalf. Having a partner during the pre-foreclosure stage can ensure that your small-to-medium lending business stays fully compliant while protecting your assets. The Total Lender Solutions team works in Arizona, California, Missouri, Nevada, Oregon, Texas, and Washington. We work alongside lending teams so that lenders can remain focused on their customers.

With over 15 years of experience, our team of real estate professionals and legal experts can transform the complicated commercial foreclosure process into clear resolutions for institutional and private lenders. We work as an extension of your team to guide you through the foreclosure process from pre-foreclosure and notice of default to the final sale phase. Contact us today.