Understanding the UT Foreclosure Process
Understanding the UT Foreclosure Process is important for you to understand the foreclosure that you are going through.
Before we start…
What does foreclosure mean?
A foreclosure occurs when the bank or lender uses legal means to take a property back which has been used to secure a loan. This usually happens after a borrower fails to make their payments.
Foreclosure isn’t a fun process, but keep in mind that it isn’t the end of the world.
Once you’re familiar with how foreclosures work in UT… you’ll have the knowledge to navigate your way through the process with as good an outcome as possible.
The Primary Stages of A Foreclosure
Every foreclosure proceeding has a few key stages.
Foreclosures are handled differently depending on which state you live in.
There are two different ways that states use to actually foreclose on properties. These are judicial sale and power of sale.
Get in touch with us by calling (801) 876-1036 or via our contact page and we can guide you through the specific local foreclosure proceedings here in Salt Lake City.
In either case, a foreclosure usually won’t head to court until the 3-6 month mark of missed payments. Typically (but not every time), the bank or lender will send out quite a few notices to you letting you know you are behind on your payments or, in arrears.
Under a Judicial Foreclosure:
- The mortgage lender needs to file suit via the courts.
- The court will send you a notice demanding payment.
- If the loan is still valid, you’ll receive 30 days in order to present payment to court so as to avoid the foreclosure (in some cases this can be extended).
- If you fail to submit payment during this period, the court will issue a judgement after which the lender can request to have your property sold – normally via an auction.
- Upon the property being sold, you will be served an eviction notice by the sheriff and forced to leave the property immediately.
Under a Power of Sale (also called Non Judicial Foreclosure):
- The bank or lender will serve you with notice demanding payment, and it’s not required to involve the courts – but, this process may receive judicial review.
- Once the determined period for waiting has expired, control of your house is transferred to a trustee by the act of creating a deed of trust.
- Afterward, your house can be sold by the trustee on behalf of the lender. This takes place at a public auction (for which a notice must be given).
Anyone with an interest in the house is required to be alerted regardless of which type of foreclosure is occurring.
As an example, any banks or contractors who hold liens against a house in foreclosure have the right to collect from the auction proceeds.
What Will Happen After A Foreclosure Auction?
Once a foreclosure is completed, the sale proceeds will go toward paying off the loan amount.
Occasionally, if the auction doesn’t provide enough to fully pay off the loan, the borrower can be issued a deficiency judgement against them.
A deficiency judgement happens when the lender attains a judgement against you, you being the borrow, where they are entitled to the funds you owe on the loan after the foreclosure sale occurs.
There are states which limit the deficiency judgement amount owed to a fair value of the home as of the time of sale, and different states let the full amount of the loan be issued against the borrower.
This is a helpful resource listing the deficiency judgement laws by state since each state is different.
Of course, it’s usually preferable to avoid a foreclosure auction. A better solution is to get your bank on the phone or work with a well-known property firm like us here at Property Seller Solutions in order to help you deal with the bank and negotiate a discount off of the amount owed so that a foreclosure can be avoided.
An investment firm with experience can assist you by doing the bank negotiations on your behalf in order to reduce the amount you owe in a sale – or even get rid of it, even in cases where you owe more than your home is worth.
If you’re needing to sell a home near Salt Lake City, we are here to help.
We buy houses in Salt Lake City UT just like yours from folks who need to sell quickly.