When a property owner is unable to make the payments on his/her home loan that is secured by a deed of trust, and the payment becomes at least 3 months delinquent, a lender may decide to move forward with a foreclosure. In the state of Idaho, there are a number of recording and notification steps that either the lender or the trustee under of the deed of trust must take prior to actually holding the trustee’s sale (foreclosure). It is important for the property owner to be aware of these steps.
The first step that a lender must take is to record a notice of default in the county in which the property is located and send a copy of that notice to the property owner at the property owner’s last known address.
The second step is a notification that is to be sent by the trustee, providing notification of the date, time and place of the trustee’s sale. The notice is sent to the property owner and other interested parties. That notice must be sent by registered or certified mail no less than 120 days before the date set for the trustee’s sale. The notice sent to the property owner is to be sent to the last address the lender has on file for the property owner.
The third step involves publication of the notice of the trustee’s sale in a newspaper serving the area in which the property is located. The notice is to be published once a week for 4 consecutive weeks, with the last publication appearing no less than 30 days prior to the trustee’s sale date.
The fourth step also must be completed no later than 30 days prior to the date of the trustee’s sale, and that step is to attempt to serve a copy of the notice of the trustee’s sale on an adult occupant of the property. The maximum number of attempts to serve that notice is 3. In some cases, a notice of the trustee’s sale must also be posted on the property.
Effective September 1, 2011, new Idaho legislation put additional requirements on some lenders regarding some loans.
(1) The lenders that are affected are those that are “state or federally regulated.” As examples, any state bank or national bank would fall in that category, as would “Fannie Mae” and “Freddie Mac”.
(2) The loans to which the new requirements apply are those loans which are secured by a deed of trust, and also were made for a non-commercial purpose, and also are secured by the property owner’s “primary residence.”
The determination as to whether a property is the property owner’s “primary residence” is to be based 100% on whether a homeowner’s property tax exemption was granted for the year in which the notice of default was recorded.
If both to the lender as well as the loan itself meet the criteria, the new law makes two additional notice requirements:
(1) The first is a notice to be sent by the lender with the notice of default, and is to include:
- Instructions regarding how the property owner may obtain information about the current amount needed to bring the loan out of default; and
- A “modification request form” which can be completed and sent to the lender (within a very strict timeframe) requesting that the lender consider modifying the loan and, if the property owner chooses, request a meeting with the lender in person or by telephone to discuss the modification request. If the property owner follows the instructions as given, the lender is required to respond to the property owner within 45 days with an answer to the modification request. The lender may request additional information and documents from the property owner during that 45 days period. A trustee’s sale may not be held until an answer to the modification request has been given by the lender.
(2) The second new notification is a notice that must be sent by the trustee in the event a trustee’s sale is postponed. The notice is to provide the new date, place and time of the re-scheduled trustee’s sale and is to be sent by registered or certified mail no less than 14 days prior to the new trustee’s sale date.
While these notification additions to the law are important and an excellent step forward, the law does not provide that the failure of a lender or trustee to follow the new requirements invalidates a trustee’s sale nor does the law provide for a private cause of action to be brought by a homeowner against a lender or trustee for the failure to follow the new requirements.