Foreclosure in Utah

How a Utah foreclosure works, step by step

1. Generally, the legal foreclosure process can't start until you're at least 120 days behind.
2. Before a notice of default is recorded, your lender or servicer must name a single point of contact and send you a written notice. The notice lists the full amount needed to cure the default, broken down item by item, and gives you a date at least 30 days after it's sent to pay that amount and avoid a notice of default.
3. The trustee records a notice of default with the county recorder where the home is. Within ten days, the trustee mails a copy to anyone who has asked for one.
4. At least three months must pass after the notice of default is recorded. During those three months, you can catch up and reinstate the loan.
5. After those three months, the trustee gives notice of the sale. It's published at least once a week for three weeks in a row, the last time between 10 and 30 days before the sale. It's also posted on the home and at the county recorder's office at least 20 days before the sale, and mailed to you at least 20 days before the sale if your deed of trust asks for notice, as it probably does.
6. The trustee or the trustee's attorney sells the home at a public auction to the highest bidder.
7. The trustee's deed passes your title to the buyer, without any right to redeem.
8. If you don't leave by the deadline in an eviction notice, the new owner will go to court to evict you.

Catching up during the three months

Within three months of the recording of the notice of default, you can pay the full amount then due under the deed of trust. You don't have to pay the part of the principal that wouldn't be due if you hadn't fallen behind. Once that's paid, the loan is reinstated as if it had never been called due.

• To get a written reinstatement figure in time, the trustee must receive your request at least 10 business days before the three months run out.
• If you want to pay off the loan, the trustee must receive your request for a payoff statement at least 10 business days before the sale.

Before the three months end, you can apply for any available foreclosure relief through the single point of contact. If you apply, the notice of sale can't be given until the single point of contact sends you a written notice of the decision. But the law doesn't make your lender offer relief or approve your application.

In my view, the three months are the most useful time you have. Ask for your numbers early, in writing.

The trustee's sale

The sale must take place between 8 a.m. and 5 p.m., at a courthouse serving the county where the home is. The trustee or the trustee's attorney runs the sale and acts as the auctioneer.

How long it takes

Foreclosure generally can't legally start until you're at least 120 days behind. Once it starts, how long you have until the sale depends on your state.

For FHA loans, HUD's time frame runs from the first legal action until the lender has clear title to the home and possession of it. In Utah, that's 12 months either way: for a mortgage foreclosed in court, the first legal action is filing the complaint, and for a deed of trust sold without a lawsuit, it's recording the notice of default.

Under Utah law, the pre-default notice gives you at least 30 days, then at least three months must pass after the notice of default, and the last published notice runs 10 to 30 days before the sale.

These are official markers, not a forecast. Your case can move faster or slower, so don't count on extra time.

Shortfalls, extra money and redemption

If the home sells for less than you owe, the lender can sue you for the difference, plus its expenses. It must file that lawsuit within three months after the sale. The judgment is limited to the difference between your total debt and the home's fair market value.

If there's money left over after the sale, the balance goes to whoever is legally entitled to it. The trustee may instead deposit the extra money with the district court in the county where the sale took place. If there's extra money, look into it. It may be yours.

A trustee's sale passes title without a right of redemption. A sale after a court foreclosure is different: it can be redeemed, within 180 days after the sale.

Rules for rescue offers and the people who make them

• In Utah's real estate licensing law, foreclosure rescue means doing something for pay that a person says will help you avoid foreclosure and that involves transferring title to a home. Someone who engages in foreclosure rescue, or advertises it, falls under the law's definition of a principal broker, who must be licensed, and doing that business without a license is unlawful.
• A license isn't needed for an owner acting on real estate the owner owns, but for that exemption, a person who only holds an option to buy a property doesn't count as its owner.
• A licensee can't do foreclosure rescue without a written agreement that says what will be done. A licensee also can't push a rescue that requires you to transfer title to the licensee or a business partner, make your mortgage payment to someone other than your servicer, or stop contacting your lender, servicer, attorney or counselor.
• A person in Utah's mortgage business can't ask you to pay a fee before you have a written loan modification offer from your lender and have accepted it in writing.
• The Utah courts list warning signs of a scam, including demands for upfront payment and being asked to sign over your home's title or papers you don't understand.

The rescue rule could touch four of my five ways, the ones where title changes hands: a cash offer, taking over payments, seller financing and a novation. The option rule touches a lease option. Ask anyone who makes you an offer, including me, how these rules apply to them, and don't stop talking to your lender while you weigh it.

Free help in Utah

• Utah Courts: foreclosure. A plain guide to each step, from the state courts.
• Utah Courts: finding legal help. How to look for free or low-cost legal help.
• Utah Housing Corporation: homeowners. If your loan is with Utah Housing, it says there may be programs to help you resolve a missed payment.
• Utah Division of Consumer Protection. Where to report a business you think is cheating you.
• CFPB: find a housing counselor. Search HUD-approved counseling agencies in Utah.