North Carolina foreclosure allows for both the judicial (in court) and non-judicial (out-of-court) foreclosure processes. Generally, the foreclosure process takes about 3 to 4 months.
A North Carolina Foreclosure will go through the courts when there are title problems. A lawsuit is filed to obtain a court order of foreclosure, and the complete foreclosure sale process is directed by the court, usually through a trustee appointed by the court.
Non-Judicial proceedings are most common. An out of court foreclosure is allowed when a clause exists in a mortgage that empowers the lender to sell the property if the borrower defaults. The clause is called a “Power of Sale” clause.
In a North Carolina foreclosure, the borrower typically gets the right to:
- Pre-foreclosure notices
- apply for loss mitigation
- receive certain foreclosure notices
- get current on the loan and stop the foreclosure sale
- receive special protections if the borrower or spouse is in the military
- pay off the loan to prevent a sale
- redeem the property after the sale
- file for bankruptcy, and
- get any excess money after a foreclosure sale.
Out of Court or not, a preliminary hearing is conducted before a power of sale foreclosure can take place. A minimum of 10 days before the Notice of Hearing, the lender must mail or personally serve the amount due plus expenses to the borrower. After these notices have been issued, the county clerk conducts the hearing to determine whether all rules have been followed and whether a foreclosure sale is warranted.
Notice of Sale & Auction
If the deed of trust or mortgage contains the Power of Sale clause then the sale is warranted. The Power of Sale Clause must indicate the time, place, and terms of sale.
A Notice of Sale, (NOS) is issued. It must include the names of all parties/entities involved, a legal description of the property, and the date, time and location of the sale. The lender must mail the NOS to the borrower and relevant parties a minimum of 20 days before the sale date. The lender also must publish the notice in a local newspaper in the county where the property is located once a week for two weeks. The last publication must not be more than 10 days before the sale date. Finally, the lender must post the NOS at the county courthouse a minimum of 20 days before the sale.
The sale is conducted between 10:00 a.m. and 4:00 p.m. on a normal business day at the county courthouse. The property is sold to the highest bidder. If the sale is postponed for any reason, a notice stating the revised date and time of the sale is required to be posted at the county courthouse.
North Carolina Foreclosure allows for upset bids. Any party may enter an Upset bid during the 10 days following the sale by submitting a deposit of at least 5 percent of the bid to the county clerk.
The borrower is granted a 10-day right of redemption after the sale They may redeem by paying what is owed to the lender plus any sale costs.