Foreclosure

Question 1

Preforeclosure rights

Answer 1

1. Mortgagee taking possession
2. Acceleration by mortgagor default
3. Transfer of deed in lieu of foreclosure

Question 2

Foreclosure is:

Answer 2

Legal process by which mortgagor/debtor/borrower is deprived of his interest in the mortgaged prop

Question 3

NC has two methods of foreclosure

Answer 3

1. foreclosure under power of sale

2. foreclosure by judicial action

Question 4

Foreclosure under Power of Sale (basic requirements)

Answer 4

1. Notice of hearing before the clerk
2. Hearing occurs
3. Notice of sale, if clerk approves sale

Question 5

Notice of hearing before the clerk (for power of sale foreclosure)

Answer 5

The mortgagee or trustee granted a power of sale under a mortgage or deed of trust who seeks to exercise such power of sale shall file with the clerk of court a notice of hearing in accordance with the terms of this section

Question 6

Notice to (for power of sale foreclosure):

Answer 6

Every record owner of the real estate whose interest is of record in the county where the real property is located at the time the notice of hearing is filed in that county

Question 7

Record owner is:

Answer 7

• Anyone who has record interest in prop
• But does not mean or include the trustee in a deed of trust or the owner or holder of a mortgage, deed of trust, judgment, mechanic’s or materialman’s lien, or other lien or security interest in the real property
• Tenants in possession under unrecorded leases or rental agreements shall not be considered record owners

Question 8

Notice of hearing requirements (for power of sale foreclosure)

Answer 8

1. Particular real estate security interest being foreclosed
2. name and address of the holder of security instrument
3. nature of the default
4. if secured creditor accelerated
5. any right of debtor to pay or cure
6. notice must be in writing and spelled out in way that person understands

Question 9

Hearing occurs (6 facts)

Answer 9

1. Valid debt
2. Not a home loan
3. Default by mortgagor
4. Mortgagor not active duty military
5. Instrument provides right to foreclose
6. Notice given to persons entitled to notice

Question 10

Notice of sale contents

Answer 10

Instrument description, date/hour/place of sale, property description, terms of sale, tax/special assessments, any subordinate rights/interests

Question 11

Posting and publishing of notice of sale of real property

Answer 11

1. Posting-Posted in area designated by the Clerk in county prop is situated at least 20 days immediate
2. Advertisement-Newspaper or general circulation. Published once a week for two successive weeks. Not less than 7 days & no more than 10 days preceding sale
3. First Class mail

Question 12

Pre-sale equity of redemption allows:

Answer 12

mortgagor to stop the foreclosure proceedings by paying the debt owed plus any expenses incurred in the foreclosure proceeding

Question 13

Pre-sale equity of redemption is:

Answer 13

satisfaction of debt after posting, before completion of sale

Question 14

Pre-sale equity of redemption rule

Answer 14

A power of sale is terminated if, prior to the time fixed for a sale, or prior to the expiration of the time for submitting any upset bid after a sale or resale has been held, payment is made or tendered of

1. The obligation secured by instrument, AND
2. The expenses incurred with respect to the sale or proposed sale, which in the case of a deed of trust also include compensation for the trustee’s services under the conditions set forth in GS 45-21.15

Question 15

Post sale right of redemption gives the mortgagor:

Answer 15

Gives the mortgagor a certain time after the foreclosure sale to buy back his or her interest by paying the outstanding debt plus costs and expenses of sale

Question 16

Upset bid is:

Answer 16

an offer to purchase the prop for an amount in excess of the highest bid at the foreclosure sale OR the last upset bid

Question 17

If upset bid not filed:

Answer 17

If upset bid not filed following sale, resale, or upset bid the rights of the parties become fixed

Question 18

If upset bid filed within 10 days:

Answer 18

If upset bid filed within 10 days after the report of sale, the process starts over

Question 19

Upset bid- during 10 days (right of mortgagor)

Answer 19

During the 10 days-Mortgagor cannot make upset bid but can exercise his statutory post sale right of redemption by paying the debt and expenses of sale

Question 20

Enjoining sale on equitable grounds (right of mortgagor)

Answer 20

Until the rights of the parties become fixed, the mortgagor has a statutory right to seek an injunction against consummation of the sale

Question 21

The mortgagor may attempt to obtain an injunction if he can show:

Answer 21

• The amount bid or price offered therefore is inadequate and inequitable and will result in irreparable damage to the owner or other interested person, or upon any other legal or equitable ground which the court may deem sufficient

Question 22

The mortgagor attempting injunction has to first:

Answer 22

plaintiff or applicant post such bond or deposit as may be necessary to indemnify and save harm which may result from granting of such order/injunction

Question 23

Right of redemption (junior interests)

Answer 23

Junior interest survive unless also paid off

Question 24

NO Clogging!

Answer 24

Courts will not recognize mortgage clauses that waive or otherwise clog mortgagor’s equity of redemption

Question 25

Disposition of sale proceeds

Answer 25

1. costs & expenses of sale
2. outstanding taxes
3. special assessments due & unpaid
4. mortgagee foreclosing on prop (the obligation)
5. surplus funds paid to clerk
6. junior lienholders