Here is a summary of foreclosure laws and rules for the State of North Carolina:
- Lenders can use either a mortgage or deed of trust.
- Lenders primarily use deed of trust and foreclose by trustee sale.
- Three notices are given: A Notice of Default is given thirty days prior to receiving a Notice of Hearing. A Notice of Hearing is given 10 days prior to the hearing. Notice of Sale must be served on the homeowner twenty days prior to sale.
- There is no right of redemption, if a non-judicial foreclosure is utilized and the lender may not sue for a deficiency if the mortgage was used to purchase the real estate.
If you are interested in reading the actual statutes relevant to mortgage and foreclosure in North Carolina those laws are available online.
Learn more about what the above procedures and rules mean. Review the homeowner foreclosure guide on this website.
Residential loan non-recourse?
Than you so much for replying to my questions about deficits in foreclosure. When this property was re-financed, it was refinanced for a residential loan, not a rental. My understanding is that this would make it a non-recourse loan? If it is a non-recourse loan, I was thinking that the bank could not sue me for a deficiencies. Is this generally true? Again, thank you so much for your response. I can not tell you how appreciative, I am.
RE: Residential loan non-recourse?
Most Deed’s of Trust have an occupancy requirement which determines whether a property is considered a principal residence. Here’s a typical clause:“Borrower shall occupy, establish, and use the Property as Borrower’s principal residence within 60 days after the execution of this Security Instrument and shall continue to occupy the Property as Borrower’s principal residence for at least one year after the date of occupancy, unless Lender otherwise agrees in write, et. Cetera.”This clause, if there is one in your Deed of Trust (or mortgage) is subject to interpretation by North Carolina law. Consult a North Carolina lawyer for a legal opinion.
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Re: Deficiency judgment on rental property
Owners of rental property generally are not protected by anti-deficiency legislation, which North Carolina apparently has. The tax value of your property is greater than what you owe the bank, but the tax value isn't the important number--you need to talk to a real estate broker about the probable market value of your home. If the market value (even after disclosing the need for rehab) is greater than the amount you owe then consider putting the house up for sale. If, on the other hand, you lose money on the sale, the bank will need to sue you to get any shortfall. Since your daughter is on the title of your other property, they theoretically can only go after your interest in the property. A lien would be placed on that property, and the bank would recover its money when that property is sold. There are a lot of variables--it depends on how you and your daughter hold title, when she acquired title with you, etc. Most of all it depends on North Carolina law--you need to speak with a North Carolina lawyer to sort through the issues. Call a lawyer and ask whether he or she does real estate work and how much the fees are. Advice from a good North Carolina lawyer would be money well spend in your situation.
Deficiency judgment on rental property?
I have a question in regards to what happens to other property that a person might own if a person is forced to foreclose on a home. I have had renters in a home and they have just given me notice that they are vacating. Without the rental money, I can not make the mortgage payment. I do not have the money to go in and do a rehab on the property. It is not rent-able until it can be rehabbed. I owe the bank approximately $190000 and the tax value of the property is approximately $220000. I think it would take about $50000 to do the work needed. I was declared disabled three years ago and the disability that I receive is not enough to make the mortgage payment on the rental property and pay my bills. I have another rental property that is in my daughter's name and mine. Can the bank take the other rental property that is held in my daughter's and my name? The rental properties are in N.C. Thank you for your help.
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