Because of how significant the consequences can be and in response to past abuses by lenders, lawmakers have implemented significant regulations governing foreclosures. One term you may encounter in North Carolina is “power of sale foreclosure,” which is a nonjudicial foreclosure that is by far the most common foreclosure action in the state. This clause in a mortgage note grants the lender the authority to sell property if a mortgagor defaults on a loan. In states where power of sale is permitted, the foreclosure process can be significantly faster. However, it’s crucial to understand how power of sale works and its implications for lenders and homeowners.
The power of sale clause bypasses the lengthy judicial foreclosure process. Once a borrower defaults on a mortgage, the lender can initiate foreclosure proceedings by following specific procedures outlined by state law. These procedures typically involve substituting the trustee under the deed of trust, sending notices to the borrower, a hearing before a clerk, and then a public auction of the property. The proceeds from the sale are used to pay off the outstanding loan balance. While power of sale may be a quicker process for lenders, it’s important that the formalities be strictly observed.It also has implications for homeowners. In many states, homeowners have a limited right of redemption, which allows them to retain their property by paying off the outstanding debt and associated costs before the sale. However, this window of opportunity is often short. Additionally, the speed of the power of sale process can leave homeowners feeling rushed and limited in their options.
Here at Lord & Lindley, we can help lenders navigate power of sale foreclosures. If you have any questions regarding the foreclosure process, please call us at (704) 405-1010 to learn how we might assist you. For more information regarding our firm, attorneys, and practice areas, please visit our website at www.lordlindley.com.