Many lenders that come to Total Lender Solutions are enacting their first-ever foreclosure. The Missouri foreclosure laws are complex and the foreclosure process can be overwhelming for lenders.
A commercial foreclosure processing firm can help by leaving lenders to focus on their customers while keeping teams compliant. Whether lenders decide to use a foreclosure firm once, or in a continued partnership, Total Lender Solutions is compatible with your organization.
*Updated April 2024
- How Can a Commercial Foreclosure Processing Firm Help?
- Preforeclosure in Missouri
- Non-Judicial Foreclosure in Missouri: What to Expect
- Judicial Foreclosures in Missouri
- Commercial Foreclosure Sales in Missouri
- Keeping Your Team Educated About Missouri Foreclosure Laws
How Can a Foreclosure Processing Firm Help?
If a lender is enacting their first-ever foreclosure, a foreclosure processing firm is a must-have. A foreclosure firm will walk lenders through the complicated process of sending and filing notices.
The Missouri foreclosure process is complex. Missing key deadlines can slow the foreclosure process, keeping lenders away from their valuable assets, while reflecting poorly on the lenders. A foreclosure processing firm streamlines the process and knows what to expect.
Having a knowledgeable foreclosure expert who knows Missouri foreclosure process guidelines is an invaluable tool to keep teams compliant and cleared from liability. Processing firms free lender teams to work on customers and protect assets. Additionally, foreclosure firms offer continued education for teams.
Frequent audits can keep teams aware of their practices and catch non-compliance before a lender might face penalties. A foreclosure processing firm like Total Lender Solutions can also serve as a continued resource for hard money lenders. Whether a lender opts for a one-time use or continued partnership, a foreclosure service is a necessity.
Related Post: How to Start the Commercial Foreclosure Process in Missouri
Preforeclosure in Missouri
Preforeclosure is the period when the borrower falls behind on payments. In some cases, lenders can foreclose on a property immediately after a single missed payment. In other cases, there’s a waiting period or certain conditions that need to be met first. It all depends on the type of property that’s being foreclosed and the terms established in the deed of trust.
Most deeds of trust, for both commercial and residential properties, establish a grace period where the borrower has a limited period of time to make the missed payment while also paying late fees or a “default rate.” But not every deed of trust has these stipulations.
Preforclosure can happen for non-monetary reasons, too. For example, if the borrower fails to meet conditions of the loan agreement, such as a minimum debt-to-credit ratio, then the lender may be able to issue a notice of default.
In most cases, lenders can pursue foreclosure faster in non-judicial cases than judicial ones.
Non-Judicial Foreclosure in Missouri: What to Expect
Missouri non-judicial foreclosures, as opposed to judicial foreclosures, are, as in most states, the more popular option. Lenders send a breach letter to borrowers who miss a payment. Borrowers must be delinquent for 120 days before a Notice of Sale can be issued, and the sale is to occur forty to fifty days after the notice. This is required by federal law in most foreclosure cases.
- Lenders must give at least a twenty-day notice of the sale.
- They must publish the foreclosure in a newspaper in the county where the property is located.
- Depending on the size of the town, they must publish either twenty times through to the day of sale, or once a week for four successive weeks, with the last one taking place the week of the sale.
How Long Does a Missouri Non-Judicial Foreclosure Take?
A non-judicial foreclosure may take several months. A common roadblock that might delay the foreclosure process occurs if the borrower files for bankruptcy, in which case the lender must halt all foreclosure proceedings until the stay is lifted or the case is dismissed. Another roadblock might occur if the borrower files for injunction or files a temporary restraining order (TRO), in which case lenders must postpone the foreclosure process until the order is expired or dismissed.
Let a firm stand by your side to navigate the Missouri foreclosure process.
Judicial Foreclosures in Missouri
Most deeds of trust include a “power of sale” clause that enables the lender to pursue foreclosure without needing to go through a court. If you want to foreclose on a property that has no power of sale clause in the deed of trust, then you’ll have to pursue a judicial foreclosure.
This is how it works:
- In judicial foreclosure, the lender must file a lawsuit and ask the court to foreclose on the property.
- The borrower will be given a short period of time to respond or present evidence that they didn’t breach the terms of the loan.
- If the borrower doesn’t respond within the allotted time, the lender will automatically win the lawsuit.
- If the borrower does respond, then the case will be brought to court, where the evidence will be reviewed, and a judgment will be made in favor of the lender or borrower.
- If the court sides with the borrower, then the loan will be reinstated.
- If the court sides with the lender, then the home will be sold at auction to pay the remaining loan balance.
Naturally, judicial foreclosures take longer than non-judicial foreclosures, adding to their cost and risk.
Commercial Foreclosure Sales in Missouri
What happens when a foreclosed property is put up for sale?
In Missouri, foreclosure sales are held at public auction. The lender is allowed to make a credit bid if they want to seize the property, or they can let it be sold to another buyer.
Here are three different scenarios that can occur:
- The lender is the highest bidder, but the bid is less than the remaining debt
In this case, the lender can obtain a deficiency judgment against the borrower and go after the borrower’s assets to recoup the outstanding balance. However, lenders should know that deficiency judgments can be nullified if the borrower declares bankruptcy.
- Someone else purchases the property for less than the remaining debt
In this case, the lender will take a loss on any outstanding debt not covered by the loan.
- The lender or a different buyer purchases the property for more than the outstanding debt
In this case, the lender will receive the surplus money made on the sale.
A commercial foreclosure firm can help make sure that profits from the sale are duly received by the lender, and they can also help the lender prepare strategies for each possible outcome of the sale.
Keep Your Team Educated About Missouri Foreclosure Laws
At Total Lender Solutions, we advocate for lenders looking to maximize recoveries on defaulted loans. For over 15 years, our team of highly experienced real estate professionals and legal experts has transformed complicated processes into clear resolutions for institutional and private lenders.
We work as a vigorous extension of your team to provide comprehensive solutions and seamless communication, from pre-foreclosure and notice of default to the final sale phase. Our dedication and persistence when it comes to the foreclosure process ensures that our clients feel confident in reaching a successful outcome. Contact us today.
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