Requirements for Foreclosure Notices in Missouri
State laws govern how foreclosures are processed on homes and properties within its boundaries. These laws dictate how the lender must execute foreclosure, when notices must be delivered to the borrowers, and the terms of the auction sale. Missouri allows for both judicial and nonjudicial foreclosures. When a nonjudicial foreclosure occurs, the lender must adhere to submitting the required notices to the proper parties in accordance with Missouri foreclosure law.
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Security Instrument
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Before a mortgage loan can fund, the lender requires the borrowers to sign a set of documents, including the security instrument. This document is very important to the lender because it acts as documentation to show that the lender holds an interest in the property until the loan is paid in full. In other words, the borrowers put the property they are buying up for collateral until they repay the lender. If they cannot repay the lender, the lender can repossess the property through foreclosure. The method of foreclosure used depends on the type of security instrument signed at the loan's closing. In Missouri, both mortgages and deeds of trust can be used for this purpose. When the lender provides a mortgage as the security instrument, the foreclosure process will occur judicially. If a deed of trust is used, foreclosures are nonjudicial. Most Missouri foreclosures occur outside of court.
Judicial Foreclosure Notices
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Missouri foreclosure law does not require the lender to notify the borrowers that a foreclosure may occur when their loan is in default, however individual lender practices may do so. Once the lender decides to initiate a judicial foreclosure, it must file a formal complaint with the court system in the county where the property is located. Most lenders will not seek foreclosure until a loan is 90 days past due or more. The complaint, known as a lis pendens contains the borrower's information, original debt amount, unpaid balance, and any other fees the lender wishes to recover from the borrower. The court will review the complaint and notify the borrowers either by mail or in person. The borrowers have a period of time, determined by the court, to respond to the complaint. If no agreement can be reached between the lender and the borrowers, the court can rule in favor of the lender and schedule a foreclosure auction sale on the property.
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Nonjudicial Foreclosure Notices
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If a lender possesses a valid deed of trust containing power of sale language, it can execute foreclosure outside of the court system. In this case, the lender's appointed trustee will oversee the foreclosure. When the lender decides to foreclose on the property in this manner, the trustee will first draft a notice of sale. This notice should contain information about the property, sale time and date, and principal balance owed on the property. This notice must be filed on public record with the county clerk and mailed to the borrowers 40 days before the date of the sale. Additionally, the notice must be published in a newspaper advertisement for at least four weeks. If the Internal Revenue Service (IRS) has filed a lien on the property the foreclosure notice must be sent to them as well.
Foreclosure Sale
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The scheduled foreclosure sale should occur in the county where the property is located between the hours of 9 a.m. and 5 p.m. When the sale begins, the auctioneer will read the terms of the sale to the bidders. The terms of the sale should have also been outlined on the notice. The highest bidder will win the property. The bidder must submit at least ten percent down at the time of the auction and the balance of the sales price by the end of the business day.
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