If you are a lending company with loans secured with commercial real estate property, you understand firsthand how frustrating it can be to manage delinquent borrowers. After your team has exhausted alternative resolution options, nonjudicial foreclosure is often the only option left to recover your assets.
Non-Judicial foreclosures – that is, foreclosures that can be completed without involving the county court – are the most common way to complete foreclosures in the states that allow them. Although nonjudicial foreclosures are less time-consuming and expensive than judicial foreclosures, they can still consume many of your team’s resources, especially in firms that are enacting their first foreclosure.
The team at Total Lender Solutions has helped hundreds of lenders to complete nonjudicial foreclosures for their properties. The first step to recovering your assets successfully is to understand the process ahead.
The Nonjudicial Foreclosure Process at a Glance
Each state that allows nonjudicial foreclosure has unique requirements that lenders must adhere to when completing a foreclosure. Failure to stay in compliance can result in the lender owing compensation to the court and the borrower for damages both real and punitive. Therefore, the importance of having an experienced professional at your side with knowledge of the law in the state where the property is located cannot be overstated.
Although there are exceptions, nonjudicial foreclosures typically happen in three stages: the notice of default stage, the notice of sale stage, and the sale stage.
Notice of Default
When a borrower defaults, after a period determined by the state, if the default is not cured, a lender will issue a notice of default (NOD). This is a written document that is filed with the county court, made public, and issued to the borrower, typically either in-person or posted conspicuously on the property. State law determines how many notices must be issued before beginning the next phase. Some states require lenders to negotiate alternative resolution options for certain property types.
Notice of Sale
After a period of time has passed, if the default has not been cured, lenders will issue a Notice of Sale (NOS). Like a NOD, the document is filed with the county court and published according to state law. The document details the exact place and time of the sale, which must take place after a certain amount of time, according to state law.
Sale Stage
If the default is not cured up to the day determined by state law that borrowers can cure the default, the property is sold to the highest bidder on the predetermined sale date.
Nonjudicial Foreclosure in Seven States
The team at Total Lender Solutions can assist lenders who need to foreclose properties located in Washington, Oregon, California, Nevada, Arizona, Texas, or Missouri. To demonstrate just how different nonjudicial foreclosures can be by state, below is an overview of the foreclosure process in each of these states.
Arizona
- Foreclosure starts with the preparation and recording of a statement of breach.
- Notice of trustee’s sale is filed, including sale date, time, and location.
- The sale date is at least 91 days after the notice recording.
- The borrower receives notice by certified mail within 5 days of recording.
- The borrower can pay off or reinstate the loan until 5 PM on the last business day before the sale.
- Property is auctioned to the highest bidder if the borrower doesn’t act.
California
- Foreclosure begins with a notice of default after a loan default.
- The borrower has three months to bring the loan current or pay off debt.
- If no action, a notice of trustee’s sale is prepared, recorded, sent to entitled parties, published in a newspaper for three weeks, and posted.
- The borrower can cure the loan until five business days before the sale or pay off until sale time.
- Property is auctioned if the borrower doesn’t cure or pay off.
Missouri
- Lenders send breach letters after borrower defaults.
- Notice of sale issued after 120 days of delinquency, sale in 40-50 days.
- Foreclosure published in county newspaper multiple times, depending on town size.
- The borrower has time to cure the default.
- Property auctioned at the scheduled sale if default is not cured.
Nevada
- After a 30-day default period, the lender details actions to cure the loan.
- The borrower in owner-occupied property has the option for mediation.
- Notice of Default and Election to Sell issued 30 days later.
- The borrower has three months to cure the default.
- “Danger notice” issued to borrower, sale proceeds after three months.
- Notice issued 20 days before the sale, published in the county newspaper.
Oregon
- 120-day delinquency is needed before notice of default.
- Mediation is offered for residential trust deeds.
- Notices were recorded in the property county courthouse, sale date around 145 days out.
- Danger notice is given to residential trust deed holders.
- Notice of sale published in the county newspaper for four weeks, last at least twenty days before the sale.
Texas
- Notice of default and intent to foreclose sent after a loan default.
- Loan accelerated notice of trustee’s sale prepared and filed.
- The notice indicates the sale date, time, and location.
- Notice posted at the county courthouse, sent by certified mail to the borrower at least 21 days before the sale.
- The borrower has three weeks to pay the loan before the sale.
- Auctions are held on the first Tuesday of every month.
Washington
- The lender sends a written notice of default to the borrower conspicuously posted on the property or personally served to the borrower
- 30 days for the borrower to cure the default
- Written notice of sale sent to the borrower, specifies the date and location of the foreclosure sale
- The sale takes place no sooner than 120 days from the issuance of the notice of default.
Foreclosure Assistance for Lenders in Washington, Oregon, California, Nevada, Arizona, Texas, and Missouri
Total Lender Solutions can guide you through the nuances of your foreclosure so that you can remain focused on your customers. We create personalized solutions for your unique challenges.
If you’re currently dealing with foreclosure, don’t hesitate to contact our team by filling out our contact form.
