The Foreclosure Process


Foreclosure is the process of taking back secured real estate on a defaulted loan. It can only begin once a true default has occurred, which we discussed in our last post. Utah uses a non-judicial foreclosure based on the trust deed. Other states must go through the court system.

Once a default has occurred, you must provide notice to the borrower of the default and give him 30 days to bring current. This is called the “Notice of Presentment.” If he does not bring current in 30 days, you can file the notice of default. This notice and 30-day waiting period, however, can be waived by the borrower if it’s included in the note. Make sure it’s in yours.

The true beginning of foreclosure is the notice of default that is recorded on title to the property. This marks the 90-day waiting period during which the borrow can bring the loan current. He must bring the loan fully current and within the 90 days, and the lender must accept it. If default is not fully fixed or later than 90 days, the lender can move to the auction phase.

Anytime after the 90-day waiting period, the lender can give notice of the auction sale of the property. This notice must be 30 days prior to the auction date. During this 30-day period, the lender is not required to allow the borrower to bring the note current but may do so or proceed to auction.

At auction, the lender may only recoup actual principal, interest, fees and expenses. If the bid amount covers these costs, the property is sold to the bidder and excess goes to junior lien holders or back to the borrower. If no bidder offers that amount, the lender may sell it “short” to the bidder or take the property himself and then sue the borrower for any shortage.

Lending, default and foreclosure has more details than covered in our blog, but hopefully you have a better understanding of the basics.


Jeffrey S. Breglio, Esq.
Breglio Law Office and REI Mastery U
(801) 560-2180


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