Foreclosure Steps in North Carolina

What are the foreclosure steps in North Carolina? People often get confused as to where they are in the process.  Many will call me saying  they have a house in the Wake County NC area that is in foreclosure. The timeline below will walk you through the process step-by-step.

Ultimately, it is up to the bank as to when to begin a foreclosure proceeding.  By far, the most common first step is that the borrower stops making their mortgage payments.

Foreclosure by definition is the action of taking possession of a mortgaged property when the mortgagor fails to keep up their mortgage payments.

The chart below will help illustrate a timeline to put the foreclosure steps in context:

Timeframe Milestone Event
30+ Days No Payment Made Lender Calling to Collect. Delinquency Reported to Credit Bureau’s
90+ days Foreclosure Attorney Assigned Partial Payment Not Accepted

 

No Payment Made

By law banks have to give a 2 week grace period on residential loans.  Late fees are assessed if no payment is received by the 14th of the month.  After the 14th, a late fee is added and they start hammering you with phone calls from the collections department.  Once the payment is 30 days late the bank will report this to the credit bureaus.

Foreclosure Steps in North Carolina
Image Credit – Cafe Credit

Foreclosure Attorney Assigned

One of the foreclosure steps is that 2 consecutive payments must be delinquent in order for the bank to begin a proceeding.  The first step is the assignment of a Foreclosure Attorney.

Once a Foreclosure Attorney is assigned, things get more expensive.  Attorney fees are now incurred which will be the responsibility of the borrower.  Partial payments will not be accepted at this point.

For example, if the current month is June 2017, and you have not made a mortgage payment since April 2017, you will not be able to make the July 1 payment without also paying:

  • May 2017 + late fee
  • June 2017 + late fee

Also, if a Foreclosure Attorney has been assigned you will have to pay attorney’s fees as well.  This get VERY expensive VERY fast!

If you do not have the money to pay your arrears you should contact us immediately!

Timeframe Milestone Event
120+ Days Substitution of Trustee Notice Attorney Files ST Notice in Public Records
7+ Days Sheriff Serves Notice Notice of Hearing Officially Served by Sheriff

 

Substitution of Trustee Notice

The next foreclosure step is for the Foreclosure Attorney to file a Substitute Trustee Notice in the public records.  The length of time this takes after the Foreclosure Attorney is assigned depends on those involved, but can be as little as 2 weeks.

If you have a home in foreclosure in the Raleigh area of Wake County NC, you can do a search for a Substitution of Trustee notice at the Wake County Register of Deeds website:

 

 

At the top of the page in the “Doc Type” field, click the drop-down arrow and select “S – TR” (Substitute Trustee).  Then, in the field labeled “Grantor” enter your name (last name first name) with no comma in between.  Click search at the bottom and see if a result is returned.

 

 

If a Substitution of Trustee document has been filed it will show above.  I have blocked the details of the above record for privacy reasons.  You would then click on the “pdf” icon to view the Substitution of Trustee document.

 

For property owners in Greenville North Carolina, go to the Pitt County Register of Deeds page:

 

 

You can do a search under your own name by entering (last name first name) with no comma in between. This is the same procedure shown in the Wake County Register of Deeds website.

After the Substitution of Trustee notice is filed, the Foreclosure Attorney sends a Hearing Notice to the Clerk of Court and to the Sheriff.  At this point, the Clerk of Court will start a file and assign the case and ID number.

Notice Served by Sheriff

In about a week to 10 days the Sheriff will either mail the Hearing Notice, deliver it by personal service to your door, or post it on the door of the property if it is vacant.

This is the point where you really need to take action by contacting us, or another investor if you are out of state.

 

Timeframe Milestone Event
21+ Day Hearing Notice Foreclosure Hearing Substitute Trustee Attempts to Get Clerk of Court to Sign Power Of Sale
21+ Days Hearing Public Auction The ST Advertises the Property for Sale
10 Days Upset Period Highest Bidder Determined with Opportunity For Upset Bid

 

Foreclosure Steps in North Carolina
Image Credit – Fibonacci Blue

Foreclosure Hearing

21 days after the Notice Hearing has been delivered, there is a Foreclosure Hearing. The objective of the Foreclosure Hearing is for the Substitute Trustee to get the Clerk of Court to sign a Power of Scale. Signing this document gives the Substitute Trustee the ability to sell your property at public auction. For two consecutive weeks the property must be listed for sale in a weekly newspaper. From this point on, bids must be secured by a 5% cash bid bond.

Public Auction

Once the Power of Sale is signed by the clerk, the property must be publicly advertised for sale. The minimum the house will sell for is

  • Outstanding principle+
  • Back interest+
  • Attorney fees+

Upset Period

Not all states have an upset period. What is unique about this method of sale is that once the highest bidder is identified, there is a 10 period where another bidder can come in an “upset the bid” by bidding the highest bid + 5%. Once the bid is upset, a new 10 day period begins. Whoever holds the highest bid without an upset wins this process.

Timeframe Milestone Event
30 Days Closing Period Highest Bidder Must Pay Full Amount in 30 Days<
30 Days Eviction Period Sheriff Removes Borrower From Home

Closing Period

The highest bidder must close with the Substitute Trustee by paying the remaining balance within 30 days.

A deed is issued to the highest bidder

Eviction Period

The highest bidder must then go through an eviction process to remove the former owner from the home.  Its sad to see a borrower walk away from their dream simply because they did not want to reach out and ask for help.

If you, or anyone you know, is behind on mortgage payment, please don’t hesitate to contact us.  We can’t help you if we don’t know who you are!

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