The Foreclosure Process Revealed

Studies conducted by Freddie Mac consistently show that a majority of homeowners don’t know that they have any options at all when it comes to foreclosures. In Utah the foreclosure process can be judicial or non-judicial.
Non-judicial is the most commonly used and the process goes as follows:

• The lender files a Notice of Default with the county recorder after a borrower fails to make payments, usually for three consecutive months. A copy is mailed to the borrower.
• The borrower has three months from the Notice of Default to stop the foreclosure by bringing the payments current. Late charges and attorney fees usually apply.
• After the three months, the lender posts a Notice of Sale at the property and is also required to advertize the sale in a local newspaper once a week for three consecutive weeks.
• The property is sold at an auction at the county courthouse at the time specified in the Notice of Sale.

Your rights and Options as a Borrower

1. Utah law does give borrowers a right-of-redemption. Borrowers can exercise this right by bringing the loan current anytime during the foreclosure process until the home is sold.
2. Pre-foreclosure Sale is a viable option for most homeowners. Also known as a “short sale”, this option allows homeowners to have some control of the sale of their home.
3. The home must be publicly listed by a real estate agent and posted in the multiple listing service.
4. The realtor contacts the bank and obtains a short-sale application from the bank. The homeowner and realtor complete the application and return it to the bank.
5. When an offer is received, it is sent to the bank for the bank’s review and approval. This may take a few weeks depending on the bank.
6. When the bank approves the offer, the sale then proceeds normally with the homeowner signing the closing documents.

Example: Amount Owed to the Bank $250,000

Current Value of Home $200,000

In a normal sale, the above homeowner would have to make up the difference by bringing $50,000 to the table to close on the sale of the home. In a short-sale, the bank writes off the $50,000 and allows the sale to proceed normally. The bank issues a “satisfaction of debt” to the homeowner.

Benefits of a Short-Sale:

• It can take up to 90 – 120 days, giving the homeowner time to plan.
• The homeowner may continue to occupy the home during the short-sale.
• Banks prefer short-sales to foreclosures because short-sales can save them thousands of dollars over the cost of foreclosing on a home.