If you default on your home loan payments in Idaho, the servicer (on behalf of the loan owner, called the "lender" in this article) will eventually begin the foreclosure process. The method will most likely be nonjudicial, although judicial foreclosures are also allowed.
Idaho law specifies how nonjudicial procedures work, and both federal and state laws give you rights and protections throughout the foreclosure.
If you get a loan to buy a home in Idaho, you'll likely sign two documents: a promissory note and a deed of trust. The promissory note is the document that contains your promise to repay the loan along with the repayment terms. The deed of trust, which is very similar to a mortgage, is the document that gives the lender a security interest in the property and will probably include a power of sale clause. If you fail to make the payments, the power of sale clause gives the lender the right to sell the home nonjudicially so it can recoup the money it loaned you.
If you miss a payment, the servicer can usually charge a late fee after the grace period expires. Most mortgage loans give a grace period of ten to fifteen days, for example, before you'll incur late charges. To find out the grace period in your situation and the amount of the late fee, review the promissory note or your monthly billing statement.
If you miss a few mortgage payments, the servicer will probably send letters and call you to try to collect. Federal mortgage servicing laws require the servicer to contact you (or attempt to contact you) by phone to discuss foreclosure alternatives—called "loss mitigation" options—no later than 36 days after a missed payment and again within 36 days after each following missed payment. No more than 45 days after a missed payment, the servicer must let you know in writing about loss mitigation options that could be available, and assign personnel to help you. Some exceptions to a few of these requirements exist, like if you file for bankruptcy or tell the servicer not to contact you under the Fair Debt Collection Practices Act. (12 C.F.R. § 1024.39).
Many deeds of trust in Idaho have a provision that requires the lender to send a breach letter if you fall behind in payments. This notice tells you that the loan is in default. If you don't cure the default, the lender can accelerate the loan (call it due) and go ahead with the foreclosure.
Federal law generally requires the servicer 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 servicer is joining the foreclosure action of a superior or subordinate lienholder, the foreclosure can begin sooner. (12 C.F.R. § 1024.41).
Again, most Idaho foreclosures are nonjudicial.
To start a nonjudicial foreclosure in Idaho, the trustee records a notice of default at the county recorder's office and mails a copy to you (the homeowner) and other parties. (Idaho Code § 45-1505).
If the property is the borrower's primary residence, a notice about the opportunity to request a loan modification has to accompany the notice of default. This notice includes a form for you to return to ask for a modification. You get 30 days to send in the form. The beneficiary (the bank, lender, or other entity that owns the loan) or its agent then has to respond in writing within 45 days to let you know that it approves or denies the modification request or that additional information is needed. The sale can't take place before the beneficiary or its agent responds to your request. (Idaho Code § 45-1506C).
After the trustee records the notice of default, it must also mail a notice of sale to you, among others, at least 120 days before the sale date. (Idaho Code § 45-1506). Idaho law doesn't require the trustee to send the notice of default before the notice of sale, though. The trustee may mail both notices at the same time.
The trustee must also:
The sale is an auction, open to all bidders. The lender makes a bid on the property using a "credit bid" rather than bidding cash. With a credit bid, the lender gets a credit up to the amount of the borrower's debt. The highest bidder at the sale becomes the new owner of the property.
"Reinstating" is when a borrower pays the overdue amount, plus fees and costs, to bring the loan current and stop a foreclosure. In Idaho, the borrower gets 115 days after the recordation of the notice of default to reinstate the loan. (Idaho Code § 45-1506).
Sometimes, a foreclosure sale doesn't bring in enough money to pay off the full amount owed on the loan. The difference between the sale price and the total debt is called a "deficiency balance." Many states allow the lender to get a personal judgment, called a "deficiency judgment," for this amount against the borrower.
In Idaho, the foreclosing lender can pursue a deficiency judgment by filing a separate lawsuit within three months after the foreclosure sale. The amount of the deficiency judgment can't exceed the difference between the entire amount of the indebtedness and the property's fair market value at the time of the foreclosure sale. (Idaho Code § 45-1512).
Some states have a law that gives a foreclosed homeowner time after the foreclosure sale to redeem the property. In Idaho, however, the former homeowners can't redeem the home following a nonjudicial foreclosure. (Idaho Code § 45-1508).
The purchaser at the foreclosure sale is entitled to possession of the property on the tenth day following the sale. Anyone remaining in possession after that time is considered a tenant at sufferance. (Idaho Code § 45-1506). The purchaser may then begin eviction proceedings.
Foreclosure laws are complicated. Servicers and lenders sometimes make errors or forget steps. If you think your servicer or lender failed to complete a required step, made a mistake, or violated state or federal foreclosure laws, you might have a defense that could force a restart to the foreclosure or you might have leverage to work out an alternative.
Consider talking to a local foreclosure attorney or legal aid office immediately to learn about your rights. A lawyer can also tell you about different ways to avoid foreclosure. Likewise, a HUD-approved housing counselor can provide helpful information (at no cost) about various alternatives to foreclosure.