By Beth Hayes, Staff Attorney, Montana Legal Services
Foreclosure is when a mortgage lender sells a borrower’s property to satisfy an unpaid debt on a mortgage. Foreclosure happens when a homeowner defaults on the mortgage. Default is another way of saying you are behind on your payments. About 15 days after you default, the lender will mail you a notice that you need to catch up on payments. The lender will also add late fees.Usually by the third missed payment the lender will enter a notice of default. Also, your lender will charge you for costs to prepare legal paperwork to proceed with foreclosure. Late fees will continue to accrue.In Montana, most foreclosures happen in a non-judicial process. This means that there will not be any court case for the foreclosure. Foreclosures in Montana happen non-judicially, through a power of sale in your deed of trust. This means that the lender can foreclose on the homeowner without going to court.When lender refers your loan to foreclosure status, it must record a Notice of Trustee’s Sale at the County Clerk and Recorder’s office. The lender must also mail a certified copy to the homeowner at least 120 days before the Trustee’s Sale date. The lender must also publish notice of the Trustee’s Sale once a week for three consecutive weeks in a newspaper of general circulation in the county where the property is located.If your lender is using a Trustee’s Sale to foreclose on your property, it cannot get a “deficiency judgment” against you. A deficiency judgment is when the house is sold for less than what you owe to the lender. The lender cannot come after you for the rest of what is owed.You have options!The most important thing to keep in touch with your lender/servicer!
- Foreclosure can best be resolved if you are proactive—contact your lender/servicer immediately.
- Keep a correspondence log: record dates, times, names (first and last), employee identification numbers, phone numbers, extensions, emails, and what was said in all conversations with your lender/servicer or any others involved in your foreclosure prevention plan.
- Keep copies of all written correspondence from your lender/servicer.
- Put your loan number on each page of all correspondence you send to your lender/servicer.
- Contact a HUD Certified Foreclosure Housing Counselor