To save your home, know N.C.'s rules of foreclosure
By Wayne Faulkner
Business Editor
wayne.faulkner@starnewsonline.com
Foreclosure isn't done in a day. And though the legal process may already have started, it may not be too late to pay up and save your home.
It's important, then, to understand the foreclosure process in
North Carolina.
There are two ways a property can be foreclosed on in North Carolina: through the power of sale provision in a deed of trust
or by judicial action, which requires filing a lawsuit and is seldom used.
PreludeWhen you bought your home you got a mortgage, which is a two-party document between you and the lender. With that was a deed of trust, which is a three-party document between you, the lender and the trustee, who holds title until the loan is paid off and who usually is an employee of the lender.
Before foreclosure proceedings start, the lender will send a letter to the borrower, typically giving 30 days to pay up, according to Hal Kitchin, an attorney with Helms, Mulliss and Wicker in
Wilmington, whose practice includes foreclosures of large commercial loans.
Notice of hearingAfter the 30 days, the lender can start foreclosure proceedings by asking the trustee to file a notice of hearing with the clerk of Superior Court in the county where the property is located.
The hearing is then scheduled with the clerk.
The borrower must be personally served with the notice of a hearing in advance. The notice contains the hearing's date, time and location, Kitchin explained. Personal service means that the sheriff will physically serve the notice directly to the borrower, but it can also be achieved by sending the notice via "first-class mail, return receipt requested."
And, if the homeowner cannot be located, the sheriff can post the notice on the property that is the subject of the foreclosure no less than 20 days before the hearing, Kitchin said.
The hearingThe borrower is entitled to be at the hearing, where the trustee must prove:
The existence of a valid debt
A default on the debt
That the lender has the right to foreclose
That those who are entitled received notice of the hearing.
The borrower has the right to dispute any of the four elements and, if the clerk finds that any of the four has not been proved, he or she can deny the lender the right to foreclose.
If the clerk determines that the four elements have been proved, the clerk will enter an order directing the trustee to sell the property.
The trustee will then file a notice of sale, post it at the courthouse at least 20 days before the sale and must publish the notice in a qualified newspaper in the county once a week for at least two successive weeks before the sale.
The trustee mails the notice of sale to the borrower at his or her last known address. The notice of sale includes the identity of the property being foreclosed on, and the date, time and location of the sale.
SaleThe sale of the property is by public auction and is conducted by the trustee. The trustee collects a deposit from the winning bidder and files a preliminary report of sale with the clerk within five days of the sale. The high bid remains open for 10 days after the report is filed, during which time anyone may submit a higher "upset" bid along with the required deposit. If there is a higher bid, a new 10-day upset bid period starts to run.
The borrower has the right to pay off the loan plus other obligations to the lender anytime before the end of the 10th day of the upset period, Kitchin said.
If no upset bid is received, the sale is final.
The trustee may give the winner time to come up with the money, though the trustee can demand the money immediately, Kitchin said.
When the trustee receives the money, the buyer gets the deed.
Within 30 days after that, the trustee must file a final report and account of the sale with the clerk.
