This page explains what a residential foreclosure is, the steps involved in the process, and where to get help.
Foreclosure is the legal process a lender can use to take the title to your home. Usually lenders start foreclosure proceedings when they think you have not made your mortgage payments.
Once foreclosure is complete you no longer own your home and two things can happen:
- The lender can then sell your home to collect the money you owe on your home loan.
- You can be evicted from the home.
Facing foreclosure can be stressful, and looking for a silver bullet to solve your problems can be tempting. Scam artists could try to take advantage of you during this time. Here are some warning signs that you could be dealing with a scam:
- Demands for upfront payment for help
- Guarantees that the help will work and let you keep your home
- Being asked to sign over the title to your home, or other documents you don't understand
- High pressure sales tactics that push you to act right away
The Consumer Financial Protection Bureau has more details on foreclosure scams.
Typically, the homeowner misses a payment and receives a notice of delinquency from the lender. If you want to keep your home and have received a notice of delinquency, or even if you have not received such a notice but cannot make your full payment, contact your lender immediately to explain your situation and see if you can work out a payment plan or if they can modify your loan so you can afford the payments. Any agreement or modification needs to be in writing. You might be able to get help from a foreclosure counselor. Please see the Resources section at the bottom of this page.
If your mortgage is being collected by a mortgage "servicer," under federal law, they are required to follow a specific "loss mitigation" process to help homeowners who are having trouble making their mortgage payments. The Consumer Financial Protection Bureau has details about what loss mitigation could look like and a webpage on mortgage relief options.
You can contact your lender at any time in the foreclosure process, and until the house is sold, there might be a chance to work out a payment plan.
Most foreclosures in Utah are done without a court case. They follow a process known as "nonjudicial foreclosure." This is also sometimes called a "trustee sale." The steps in a nonjudicial foreclosure are below.
Step 1. Account delinquent
If a homeowner fails to make their monthly payment on time, their mortgage becomes delinquent. The loan is now in "default." The lender should provide the homeowner a Notice of Delinquency and give them the opportunity to make the past due payments.
Step 2. Preforeclosure notice
The lender or loan servicer must mail a notice to the homeowner giving them at least 30 days to become current on the loan ("cure the default") and provide them a "single point of contact" with which to speak regarding their loan. Utah Code 57-1-24.3
Federal law usually prevents a "mortgage servicer" from initiating a foreclosure until the borrower is more than 120 days overdue on the loan. 12 CFR 1024.41
Step 3. Notice of Default (Utah Code 57-1-24)
The foreclosure process formally begins when the trustee (a third party, such as an escrow company, bank, or other financial institution, that holds the legal title to the property until you pay off the amount you owe) records a Notice of Default at the County Recorder's office. The Notice of Default is different from the Notice of Delinquency.
Within ten days of recording the Notice of Default at the County Recorder's office, the trustee mails a copy of the Notice of Default to anyone who has requested a copy. You should be sent this notice. It is usually sent by registered mail, requiring you to pick it up at the post office or sign for it. If you do not pick it up, the notice will likely still be valid. Utah Code 57-1-26(2)(a)
The Notice of Default gives you three months to become current on the payments, and any late fees, legal fees and collection fees. This is sometimes called "curing the default."
Step 4. Notice of trustee's sale
If you do not cure the default in the three month period, the trustee will record a Notice of Sale and:
- mail a copy to you at least 20 days before the sale (if your deed of trust includes a request for notice, which it probably does)
- publish the Notice of the Sale in a newspaper once a week for three weeks, and
- post the Notice of Sale on the property at least 20 days before the sale. Utah Code 57-1-26(2)(b) and Utah Code 57-1-25
You can request that the trustee postpone or stop the sale and cancel the Notice of Default by paying the entire loan balance as well as legal fees and other fees associated with the foreclosure.
Step 5. Foreclosure sale
At the foreclosure sale, the property will be sold to the highest bidder, which is usually the bank that is foreclosing on your mortgage. At the sale, the bank doesn't have to bid cash. It can bid the amount that you owe them and relieve you of all further financial responsibility. If the credit bid is the highest bid at the sale, the property then becomes owned by the lender.
Step 6. Deficiency judgment following sale
Sometimes the property will sell for less than what you owe on the loan. This is called a deficiency. If there is a deficiency, the lender can sue you in court for the difference between what you owe on the loan and the amount the property was sold for, plus their expenses. The lender must sue you within three months after the sale. The amount of the deficiency judgement is limited to the difference between your total debt on the property and the property's fair market value. Utah Code Ann. § 57-1-32
If the home is sold for more than you owed on it, the trustee may deposit the excess proceeds with the district court in which the sale took place and leave it to the court to decide who is entitled to those funds. You might be entitled to this money. See our Petition for Adjudication of Priority to Funds on Trustee's Sale web page for more information and forms.
If you don't vacate the property following the foreclosure sale, the new owner can take steps to evict you. The eviction process starts with an Eviction Notice. If you don't leave by the deadline given in the notice, the new owner will go through the court system to evict you. See our webpage on Eviction for more information.
Extra time for tenants
A tenant living in the home may be entitled to a 90 day notice before they can be evicted. The protection applies to mortgages that are federally related. To receive this extra time they must show that they are a "bona fide" tenant. A bona fide tenant:
- is not the foreclosed homeowner or the spouse, child, or parent of the foreclosed homeowner
- negotiated their lease with the previous homeowner as if they were strangers, without giving or receiving any special favors, and
- is required to pay rent that is not substantially less than fair market rent for the property or the unit's rent is reduced or subsidized due to a Federal, State, or local subsidy.
12 USC 5220, note.
For more information on the eviction process see our page on evictions.
The Consumer Financial Protection Bureau has a list of housing counselors, searchable by ZIP code.
You can also get help by 888-995-HOPE (4673) to speak with housing counselors available across the country.
Additional Foreclosure Resources
Consumer information on mortgages from the Consumer Financial Protection Bureau.