How to Do a Foreclosure in Missouri

The recession has resulted in an increase in foreclosures across the U.S.

When a homeowner does not pay a mortgage on a primary residence secured by a deed of trust and promissory note, a foreclosure sale is the sole remedy for the lien holder. In a judicial foreclosure, the mortgage company files a formal lawsuit against the purchaser of a residence or against a business property owner. This procedure is allowed in all foreclosures except cases in which a homeowner has executed a deed of trust and has signed a promissory note for purchase of a single, owner-occupied residence. If the homeowner fails to make payments, the trustee (who is the actual legal titleholder) can file a notice of default and, if payments are not brought current before the date of sale of the residence, hold a public foreclosure sale (where anyone can bid on the property). Non-judicial foreclosures account for almost all foreclosures in Missouri.

Things You'll Need

• Foreclosure forms
• Notary Public
• Attorney (recommended)
• Trustee sale guarantee policy
• Deed of trust
• Promissory note
• Substitution of trustee form, if applicable

Instructions

1. Obtain the deed of trust and promissory note. If these are not available, you may be required to post a surety bond at your own expense.

2. Calculate the balances past due. You will need the payoff balance to prepare the petition for foreclosure form and to have a current amount to inform the debtors and prospective foreclosure auction bidders.

3. Record a signed and notarized substitution of trustee form, if necessary. When property is purchased on a deed of trust, a neutral person or entity holds title and is the party that can conduct a foreclosure sale. The lien holder can choose to switch to a different trustee to handle a foreclosure. If this is the case, a substitution of trustee form must be executed and recorded A sample substitution of trustee form can be found online at the Advantage Trustee website.

4. Purchase a trustee sale guarantee policy from a title company in the amount of the past due balance plus estimated costs, trustee's fee, and an estimate of interest accruing to the trustee sale date. The cost varies according to the value of the foreclosed real property.

5. Prepare and record a notice of sale form at the county recorder's office. There will be fees charged to record this notice. The notice of default should contain the names of all interested parties, the outstanding balance required for the homeowners to pay the balance owed (including the trustee's fees and costs accrued), the book and page of the deed of trust, the names of each grantor, the terms and place of sale, and a description of the property.

6. Publish the notice of sale form in a weekly newspaper at least one time per week for four weeks. You will need to pay the newspaper for publishing costs. The final publication must occur not more than one week prior to the scheduled sale date.

7. Send copies of the recorded notice of sale to all interested parties via certified or registered mail. The notice should be mailed at least 20 days before the scheduled sale date.

8. Send a copy of the notice of sale to the Internal Revenue Service (IRS) if there is an IRS tax lien on the property. This must be done at least 30 days before the scheduled sale date.

9. Conduct the sale if the debtors do no redeem it (i.e., pay the outstanding debts). The trustee is the person or company that holds the auction. The trustee must appear at the location and at the time and day stated in the notice of sale. The trustee must read the notice aloud and state the terms of sale. Bidding may then take place and the highest qualified bidder will be awarded the property. The trustee will then award title of the property to the winning bidder.

Tips & Warnings

• Purchasing a trustee sale guarantee insurance policy can be valuable in the event the trustee in connection with the foreclosure made mistakes.

• Failure to strictly adhere to any of the procedures will invalidate the foreclosure sale.

References

• RealtyTrac: "Missouri Foreclosure Laws"
• State of Missouri Foreclosure Statutes: "RSMO Section 443.190-443.706"
• Advantage Trustee: "Substitution of Trustee"

Resources

• Martin, Leigh, Laws, & Fritzlen, P.C.