When a homeowner gets behind on their monthly payments, whether that is the mortgage or taxes, the lender can start a foreclosure process. Foreclosure is when the lender will take ownership of the property again, and usually try to auction it off to recoup the missed payments and outstanding balance of loan. There is a timeline that must be followed, and luckily if you have been given a Notice of Default, you still have time and a chance to save your house from being taken away.

Federal law generally requires the lender to wait until the loan is over 120 days delinquent before officially starting a foreclosure. However, in a few situations, like if you violate a due-on-sale clause or if the lender is joining the foreclosure action of a superior or subordinate lienholder, the foreclosure can begin sooner. (12 C.F.R. § 1024.41).

To start a nonjudicial foreclosure in Alaska, the trustee records a notice of default in the appropriate recording district not less than 30 days after default and not less than 90 days before the sale. Then, the trustee:

• mails a copy by certified mail to you (the borrower) and various other parties within ten days after recording the notice of default, or

• personally delivers a copy of the notice of default to you and various other parties within 20 days after the recording date. (Alaska Stat. § 34.20.070).

Most foreclosures in Alaska are Non-Judicial, meaning the lender does not have to go to court to proceed with foreclosure. Typically, after two to three weeks of receiving the Notice of Default, the homeowner will receive a Notice of Trustee’s Sale. This document outlines the specific time and location that an auction will be held for the property.

The trustee (lender) must also:

• post a notice of sale in three public places within five miles of the place where the sale is to be held at least 30 days before the foreclosure sale

• publish the notice of sale in a newspaper once a week for four successive weeks before the sale date, and

• publish the notice of sale on an Internet website beginning at least 45 days before the sale date. (Alaska Stat. § 09.35.140).

"Reinstating" is when a borrower pays the overdue amount, plus fees and costs, to bring the loan current and stop a foreclosure. Under Alaska law, you can reinstate the loan at any time before the sale date. But if the trustee filed two or more prior notices of default and you reinstated each time, the trustee can refuse to accept a subsequent reinstatement. (Alaska Stat. § 34.20.070).

After the sale, the purchaser must give you a notice to quit (vacate) before starting eviction proceedings. (Alaska Stat. § 09.45.630).

Hearing the words foreclosure can be scary, but there are options and considerations you have to help you out of this tough situation.

• You could always try to get a personal loan from a friend or family member to pay off the arrears. Although that is going to add on to your monthly payments.

• You could try applying for a loan modification. Loan modification is a change made to the terms of an existing loan by a lender. It may involve a reduction in the interest rate, an extension of the length of time for repayment, a different type of loan, or any combination of the three. Such changes usually are made because the borrower is unable to repay the original loan. Most successful loan modification processes are negotiated with the help of an attorney or a settlement company. Some borrowers are eligible for government assistance in loan modification.

• If those options above don’t work out, there are more creative ways to keep the foreclosure off your record. Contact us for more information!