It’s been estimated that close to 625,000 homes in America were foreclosed upon in 2018. And while that number is nowhere near the amount reported at the height of the housing crisis in 2008, that’s still a sobering statistic for many homeowners—particularly in Utah, where housing prices have been reported to have jumped at a rate of 4.5 percent annually since 1991.
Foreclosure is never something any homeowner wants to ponder. It can be a lengthy process, and one which can take a heavy toll both emotionally and financially. And it’s a process you may wind up facing somewhere down the line. The future is never certain. Divorce, job loss, medical bills… all of these can wind up taking greater priority than you might have expected.
But foreclosure is a process; and one whose steps you need to be aware of. You may have received a notice of default on behalf of your lender recently, and wondered just what it was—and more importantly, how it might affect you. Unfortunately, it’s not something you can ignore. But it is something you need to prepare for. Let’s go through the process.
How Does A Notice Of Default In Utah Affect My Property?
Utah generally operates as a title theory state, where a property title remains in trust to a lender (or an appointed trustee) until the initial agreements of a loan are paid off. However, a title theory state administers foreclosures non-judicially—meaning sales and notices of default are not approved through court hearings, Instead, they’re administered through clauses in the mortgage contract itself, allowing a lender to legally serve you with foreclosure notices. In Utah, this involves a three step process:
Before a foreclosure proceeds with a notice of default, a lender must legally offer a homeowner an opportunity to negotiate any money owed. It’s not unheard of for Utah-based lenders to send a notice to default to trustors after as little as 2-3 consecutively missed payments. While some institutions can sometimes allow you a chance to refinance your mortgage, you’ll find more often than not they can be fairly unsympathetic.They want any and all back money owed on your existing mortgage paid in full—typically in 30-60 days. For some of you, that may be realistic. But for most? Probably not. It’s better to think of a notice to default to trustor as a “final warning” before foreclosure proceedings are initiated.
As indicated previously, a notice of default is not something to take lightly. It means that the minor leeway a lender may have offered you has closed and you’ve defaulted on your loan. A financial institution can now legally proceed with any foreclosure sales or auctions at their express given consent. A notice of default is filed within a county recorder’s office and must be mailed to a borrower no later than ten days after being recorded.
However, Utah does have a unique conveyance known as a reinstatement of mortgage which allows homeowners to get an additional three month stay after receiving a notice of default in order to pay off back debts. You have 3 months to bring your mortgage current after you receive a notice of default. Partial payments will not be accepted without approval from your bank and will typically require a loan modification approval.
Both a notice of default and a notice of sale are a matter of public record; and will frequently be published in your local county newspaper (or online.) This can not only affect both your credit rating and subsequent ability to borrow or refinance, but increasingly your job status (if you’re seeking new or alternate employment.) Recently, many major employers are taking character skills and responsibility in reviewing the status of new applicants; and while it may seem entirely irrelevant to your qualifications, defaulting on a loan can unfortunately prove to be a barrier.
A notice of sale listing its date and location is sent out by certified mail no later than 20 days prior to the sale itself. Assuming you have not made prior negotiations with your lender regarding new payment arrangements, you may find that the sale will be final. While some states may offer a right of redemption for homeowners to purchase back their property after a foreclosure, Utah is unfortunately not one of them.
How Do I Avoid A Notice Of Default ?
The easiest way to avoid a notice of default is often the most unrealistic one for many homeowners. It simply requires paying off any and all mortgage debt in full upon receiving a notice of default to trustor. Lenders, as we stated, are frequently unsympathetic to your given circumstances. However, no two financial institutions are alike. You may have both an excellent history and rapport with your given lender; and you can sometimes find that debt rearrangement plans can be easily obtained provided you have a long standing history with your bank.
The next step is to use the three month mortgage reinstatement period to pay off both back debts, fees and scheduled payments. Many homeowners find they’re simply in temporary financial arrears, and this particular grace period offers more than enough time to catch up.
A short sale will allow you the opportunity to sell your house if you owe more on your house than you will get with a traditional sale. A short sale is a long and drawn out process. Your bank has to approve the sale price of your house in a short sale, and many times your mortgage company will not approve a short sale. You may not want to pay broker fees, inspection services and property title fees out of the sale; particularly if you have less than 90 days prior to foreclosure.
At Gary Buys Houses, we offer a unique solution. It’s called our Sell Now, Move Later program. It’s a cash offer to sell your home which allows you to stay in your home until you need to move; sometimes rent free, under certain short term circumstances. The best part? The sale of your home is guaranteed—frequently in as little as 4-6 business days.
A notice of default isn’t anything to be taken lightly. Hopefully, you have an understanding lender who recognizes your needs and can work with you during any temporary setback. But just like it’s important to know what to expect during the foreclosure process, it’s equally important to know you have options to help keep it under control.