The Required Notice for a Foreclosure

You are likely to receive reams of paper during a foreclosure.

Foreclosure is a state-regulated process. In the U.S., most states have either a judicial process, which is an in-court process, a nonjudicial process, which is really a series of administrative notices, or both. Precisely what notices are required depends on both the process type and the specific requirements set forth in state law.

Pre-Foreclosure

In some states, the lender must mail or serve the borrower with a pre-foreclosure notice. Pre-foreclosure is the period of time after the borrower has missed one or more payments but before a notice of default or court filing has occurred. In Minnesota, a lender intending to foreclose must send the borrower a notice with foreclosure prevention counseling resources before beginning the foreclosure process. In New York, a lender must send the borrower a notice informing him of steps he can take to avoid foreclosure at least 90 days before initiating a foreclosure.

Foreclosure Initiation

Almost all states require some sort of notice to borrowers, and some states also require notices to tenants as well when the lender initiates foreclosure. In nonjudicial foreclosure states, lenders often send a notice of default to the owner. In judicial foreclosure states, lenders file a complaint in court and send a copy of the complaint and summons to the borrower. In just a few places, such as Michigan, the lender is not obligated to notify the borrower. However, even in those states it is unlikely the borrower would not know a foreclosure was on its way. Lenders frequently call and write borrowers repeatedly after their first missed payment, and in some cases the promissory note or other loan document requires the lender to notify the borrower, apart from and regardless of state law requirements.

Sale Notice

Whether a lender is acting through a judicial or nonjudicial process, the foreclosure ultimately ends in a foreclosure sale. All states require notice for the sale process -- some by posting, most by published notice in a newspaper. Usually the lender is responsible for arranging the notice; however, in some states, such as Florida, the court clerk is the responsible party.

Post-Foreclosure Notices

The notice or notices required after the foreclosure has occurred depend on the new owner's plan for the property, whether the property is owner- or tenant-occupied and whether the lender pursues a deficiency judgment. The federal Protecting Tenants at Foreclosure Act requires new owners to honor existing leases and provide rental tenants with at least 90 days written notice before initiating an eviction. Eviction notices to former owner occupants varies by state. In many it requires court filing after a written notice. A deficiency judgment is a court order authorizing the lender to collect an unpaid debt. In some states, a lender can go to court and ask for a deficiency judgment for the difference between the proceeds from the property's sale and the loan balance. When court actions are taken, the former owner receives a summons and complaint.

References

• RealtyTrac: Foreclosure Laws and Procedures by State
• State of New York Banking Department: 90-Day Pre-Foreclosure Notice Report (p.2)
• Minnesota Office of the Revisor of Statutes: Foreclosure Prevention Counseling
• RealtyTrac: Michigan Foreclosure Laws
• RealtyTrac: Florida Foreclosure Laws
• Nolo: The Foreclosure Survival Guide - After You Get a Notice to Leave

Resources

• Protecting Tenants at Foreclosure