Learn about the foreclosure process in North Dakota, including pre-foreclosure stages, foreclosure processes, and homeowners’ rights under both state and federal laws.
Prior to the 2010 foreclosure crisis, federal and state rules governing mortgage servicers and foreclosure processes were relatively restricted and favored foreclosing lenders. Loan servicing and foreclosure procedures are now extensively regulated by federal and state regulations. And the majority of the laws protect borrowers.
In general, servicers must give homeowners with loss mitigation options, account for each foreclosure stage, and rigorously adhere to foreclosure rules. In addition, most persons who take out a loan to purchase a home in North Dakota sign a promissory note and a mortgage. In addition to federal and state legal safeguards, these papers provide homeowners with contractual rights.
In a North Dakota foreclosure, you will almost certainly be given the right to:
get preforeclosure notice apply for loss mitigation receive foreclosure notice and the opportunity to reply in court receive additional protections if you are in the military pay down the debt to avoid a foreclosure sale
After the foreclosure sale, you may redeem the house and get any surplus funds.
So, if you’re a North Dakota homeowner who’s fallen behind on your mortgage payments, don’t be surprised. Learn about each stage of a North Dakota foreclosure, from the first missed payment through the foreclosure auction. Once you understand the procedure, you may make the most of your position and, ideally, find a method to preserve your house or, at the very least, get through it with as little stress as possible.
Table of Contents
What Exactly Is Preforeclosure?
The time after a payment default but before to the commencement of a foreclosure is often referred to as the “preforeclosure” stage. (Sometimes, the period before a foreclosure sale is also referred to as “preforeclosure.”) During this period, the servicer may charge you late fees and inspection costs, and in most circumstances, must tell you about alternatives to prevent foreclosure and give you a preforeclosure notification known as a “breach letter.”
Fees that the Servicer May Charge During the Preforeclosure Process
If you miss a payment, most loans have a grace period of ten or fifteen days, after which the servicer will charge a late fee. The servicer will charge you this amount every month you skip a payment. Examine the promissory note you signed to determine the late fee amount and grace period for your loan. This information is also available on your monthly mortgage statement.
Furthermore, many North Dakota mortgages permit the lender (or current loan holder, referred to as the “lender” in this article) to take the appropriate procedures to defend its interest in the property. Property inspections are carried out to check that the house is inhabited and well-maintained. Inspections, which are often drive-by, are frequently scheduled automatically if the loan goes into default and cost roughly $10 or $15.
Fees for broker’s pricing opinions, which are similar to appraisals, and property preservation charges, such as yard upkeep or winterizing an abandoned house, are examples of additional fees that the servicer may charge.
Federal Mortgage Servicing Regulations and Foreclosure Defenses
If the property is your primary residence, the servicer must contact you, or attempt to contact you, by phone no later than 36 days after you miss a payment and again within 36 days after each subsequent delinquency to discuss loss mitigation options, such as a loan modification, forbearance, or repayment plan. No later than 45 days after a missed payment, the servicer must notify you in writing of any loss mitigation measures that may be available and designate staff to assist you in attempting to prevent foreclosure. There are a few exceptions to some of these criteria, such as if you’ve filed for bankruptcy or instructed the servicer not to contact you in accordance with the Fair Debt Collection Practices Act (12 C.F.R. 1024.30, 12 C.F.R. 1024.39, 12 C.F.R. 1024.40).
Dual tracking is also prohibited under federal mortgage servicing requirements (pursuing a foreclosure while a complete loss mitigation application is pending).
What Exactly Is a Breach Letter?
Many North Dakota mortgages have a clause that requires the lender to give you a notification, generally referred to as a “breach letter,” advising you that the loan is in default before it may be accelerated. The breach letter provides you with an opportunity to remedy the default and prevent foreclosure.
When Can a Foreclosure Begin?
Subject to a few exceptions, the servicer normally cannot start a foreclosure unless you are more than 120 days behind on payments. (12 C.F.R. § 1024.41). This 120-day window gives most homeowners plenty of time to file a loss mitigation application to the servicer.
What Is the North Dakota Foreclosure Process?
If you fall behind on your mortgage payments for your North Dakota house, the foreclosure will be judicial.
North Dakota Foreclosure Notices
In North Dakota, the bank must provide the homeowner at least 30 days, but no more than 90 days, notice before bringing a foreclosure complaint in court. 32-19-20 (ND Cent. Code). The notification provides the borrower 30 days to settle the overdue sums in order to prevent foreclosure. 32-19-21 (ND Cent. Code).
The Process of Judicial Foreclosure
A judicial foreclosure occurs when a lender files a lawsuit in order to get a court judgment permitting a foreclosure sale. When you are served with a copy of the complaint and a summons, you will become aware of the litigation. 32-19-29 (ND Cent. Code).
If you do not reply to the action, the lender will request and almost certainly get a default judgment, allowing it to conduct a foreclosure auction. However, if you opt to fight the foreclosure action, the matter will be litigated. The lender may then request that the court award summary judgment. A summary judgment motion requests that the court award judgment in favor of the lender since the key features of the case are undisputed. If the lender wins on summary judgment or you lose at trial, the judge will issue a judgment and order your property auctioned at auction.
The officer conducting the sale is required to publish a notice of sale in a newspaper once a week for three weeks and, in certain situations, send copies to interested parties. (North Dakota Cent. Codes 28-23-04, 32-19-08).
The Foreclosure Auction
The lender frequently puts a credit offer during the auction. The lender has the option of bidding up to the whole amount owing, including fees and charges, or bidding less. In certain areas, if the lender wins the auction but bids less than the entire amount, the lender may get a deficiency judgment against the borrower. However, in many North Dakota foreclosures, a deficit judgment is not permitted.
If the lender is the highest bidder, the property is referred to as “Real Estate Owned” (REO). However, if a buyer, say a third party, is the top bidder and offers more than you owe, and the sale results in excess proceeds—that is, money in excess of what is required to pay off all liens on your property—you are entitled to that extra cash.
How Do I Prevent a Foreclosure in North Dakota?
Reinstating the loan, redeeming the property before the sale (or for a limited time after that), or filing for bankruptcy are all possible options to avoid a foreclosure. (Of course, if you can work out a loss mitigation alternative, such as a loan modification, you can avoid foreclosure.)
Renewing the Loan
In North Dakota, the borrower has 30 days after receiving the preforeclosure notice to restart the loan. 32-19-28 (ND Cent. Code). Furthermore, many mortgage arrangements provide the borrower with extra time to restore. In addition, the lender may consent to a later reinstatement.
Property Redemption
A foreclosure may be avoided by “redeeming” the property. To redeem, you must pay off the whole loan amount before the foreclosure auction.
In certain areas, the borrower has a limited time following the foreclosure to redeem (repurchase) the property. Except for abandoned or agricultural land, the borrower in North Dakota normally has the ability to redeem the property within 60 days after the sale. (North Dakota Cent. Code 32-19-18). Abandoned properties are exempt from the redemption time provided by law, and if the court judges that the real property has been abandoned, the redemption period may be eliminated. 32-19-19 (ND Cent. Code). If the property is agricultural, the redemption period is 365 days after the bank files the summons and complaint with the clerk of district court or the first publication of the notice through advertising, but no sooner than 60 days after the sale. (North Dakota Cent. Code 32-19-18).
Declaring Bankruptcy
If you are facing foreclosure, filing for bankruptcy may be beneficial. In fact, if a foreclosure auction is expected to take place within the next few days, filing for bankruptcy is the best strategy to halt it quickly. When you declare bankruptcy, something called a “automatic stay” takes place. The stay acts as an injunction, preventing the lender from foreclosing or otherwise attempting to collect its obligation, at least temporarily.
Filing for Chapter 7 bankruptcy may often postpone the foreclosure by many months. If you want to keep your house, filing for Chapter 13 bankruptcy may be the solution. Speak with a local bankruptcy attorney to learn more about your choices.
Deficiency Judgment Statutes in North Dakota
In rare cases, the borrower’s entire mortgage debt surpasses the foreclosure selling price. A “deficiency” is the difference between the total debt and the selling price. Assume the entire amount owing is $400,000, but the house sells at the foreclosure sale for $350,000. The shortfall is $50,000. To collect the deficit, the lender in certain jurisdictions may pursue a personal judgment, known as a “deficiency judgment,” against the debtor. In general, after a shortfall judgment is obtained, the lender may collect the amount—in our case, $50,000—from the borrower.
Deficiency judgments are prohibited in North Dakota foreclosures of four or fewer units, one of which the owner occupies as a homestead, on up to 40 contiguous acres. If the property is agricultural land of more than forty acres, the bank may get a deficiency judgment; however, the judgment is restricted to the difference between the amount of the debt and the fair market value of the land at the time the foreclosure commences. (North Dakota Cent. Code 32-19-03).
More Foreclosure Resources and Where to Find Your State’s Statutes
This page will include information on North Dakota foreclosure laws, as well as reference to legislation so you may learn more. Statutes change, so double-checking is usually a good idea.
Where Can I Find Federal Foreclosure Laws?
If you’re seeking for federal legislation, you should check out the Library of Congress’ legal research page, which includes connections to government rules and statutes.
Where Can I Find State Foreclosure Laws?
Search online for “North Dakota statutes” or “North Dakota laws” to uncover the state’s laws. Check that you are reading the most current official legislation. The URL will usually end in “.gov,” otherwise the laws will be on an official state legislative website.
More Foreclosure Information
Visit the Consumer Financial Protection Bureau (CFPB) website for further information on federal mortgage servicing regulations and foreclosure relief alternatives.
Although the Making Home Affordable (MHA) initiative’s initiatives have ended, the MHA website remains valuable for families facing foreclosure.