 North Carolina Loan Modification Guidelines
When you develop a definite plan of action with well-timed, well-informed
steps, you can stop the foreclosure process and save your home. We have
outlined the foreclosure process for the state of North Carolina.
The Process
Foreclosures in North Carolina take place by filing a lawsuit. North Carolina
doesn't use privately conducted mortgage foreclosure sales. A lender begins
by filing a complaint of foreclosure in the Superior Court. Constructive
notice can be given by recording a lis pendens with the clerk or register
of the county where the land is located. A lender may file a foreclosure
suit simply to collect the unpaid payments rather than the entire unpaid
principal balance. If so, the lender can get a judgment for the missed
payments and yet hold the mortgage and the note intact for the rest of
the loan balance. The property may be sold through a foreclosure sale with
the mortgage lien and note still in place so that the buyer at the foreclosure
sale holds title subject to the existing mortgage lien and note. In this
type of sale, however, the lender may not collect a deficiency judgment
against the borrower.
Preliminary Notices
In North Carolina once the lender wins a judgment to foreclose on the real
estate, whether in part, as just described, or in whole, by a writ of execution,
the sheriff or another officer will conduct the sale. The foreclosure notice
must be posted in the county office of the county where the property is
located, and on the property in foreclosure. The notice must be advertised
in two newspapers in the county, one of which must be either the county
seat or the largest municipality in the county. The person seeking the
foreclosure must notify the property owner and any other parties to the
foreclosure lawsuit at least ten days before the sale. The newspaper ad
must disclose any title defects, unless the court has ordered the foreclosure
sale completed free of any liens. The buyer can back out of the purchase
if the ad did not disclose the title defects, or if the sale was not ordered
to be free of liens. The buyer must begin by notifying the court that a
defect in title exists.
Sale Procedures
The sheriff may then proceed to sell the property in the manner directed
by the court. The sheriff must deliver the deed unless an objection to
the sale is made within ten days after the sale, or the objection is made
before the deed was delivered, if delivery is past ten days from the sale.
Unless there are valid objections, the court will confirm the sale. Thereafter
the sheriff must file a report of the sale with the court within a reasonable
time.
Deficiency Judgments
Deficiency judgments are permitted in North Carolina. A lawsuit for a deficiency
must be commenced within three months from the date of the foreclosure
sale, or confirmation of the sale if confirmation was required. Although
the deficiency suit is a separate lawsuit, it can only be brought against
a person who was joined to the foreclosure lawsuit and who is personally
responsible for the mortgage debt. Such a person must be served with the
process. On a note that is dated on or after May 1,1980, the debtor may
dispute the deficiency by introducing evidence of the fair market value
of the mortgaged premises at the time of the foreclosure sale. The deficiency
is limited to the difference between the fair market value of the premises
and the balance due on the loan. However, a borrower should object to the
foreclosure sale price prior to the confirmation of the sale. The failure
to do so may set the borrower up for a larger deficiency. However, some
North Carolina courts are refusing to confirm the foreclosure sale unless the
lender agrees, as part of the confirmation, not to sue the borrower for
a deficiency greater than the difference between the fair market value
and the balance owed on the loan.
Redemption
Redemption is possible during the ten days a borrower has to object after
a foreclosure sale. If the borrower objected to the sale, then redemption
is possible anytime until the court rules on the objections, which may
be longer than ten days.
If the lender sues the borrower for deficiency, the effect is to reopen
the foreclosure sale, which would otherwise have been final and proof against
a right of redemption. A deficiency gives a borrower the right to bring
an action to redeem the property within six months after the lender's deficiency
judgment is rendered. However, persons who answered the deficiency suit,
disputing its amount, and lost may not redeem.
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