Collapsed housing values, high unemployment rates and stricter than ever lending criteria continue to contribute to the high rate of foreclosures. In Missouri according to Realtytrac, there are fewer foreclosures than many other states and the statistics are getting better than many other areas of the country. Homeowners should still understand the legal rights in Missouri during a foreclosure.
Missouri lenders place their mortgages into a trust where it is held until the mortgage is paid in full. This process allows them to begin the foreclosure procedure without the need to go to court. The process is known as a “non-judicial” foreclosure, although the property owner should be aware of the notifications that must be done as stated in Missouri foreclosure statutes which include:
• Missouri property owners living in an area with more than 50,000 residents who have received a foreclosure sale notice should see notices of foreclosure sale published a minimum of 20 times in the newspaper. The notice must run through the date of the sale.
• Property owners who live in communities with less than 50,000 residents can expect to see foreclosure sale notifications for a minimum of four weeks in local newspapers.
• Property owners must be notified in writing not less than 20 days prior to the sale. The notice must be sent by registered or certified mail and must include all the details of the sale including location, time and conditions of the sale.
Legal documents required
Lenders who are attempting to foreclose on a property must provide certain documentation that proves that they have the legal right to foreclose on the property. With the “robo-signing” scandals that have occurred, this process may be more difficult than many first think. Property owners who are facing foreclosure should demand the following documents from the lender in the event of a foreclosure notice:
• Deed of trust – this is the document that establishes legal right to the property. The lender must establish that they have the legal right to the property (a) to transfer when the mortgage is paid or (b) to foreclose on the property in the event of nonpayment.
• Mortgage – the mortgage is the legal document that explicitly states that the borrower (e.g., the homeowner) has agreed to borrow funds from the lender shown on the note. This document is typically filed once the home purchase is closed. Without this document, the lender cannot prove that the borrower owes mortgage payments. Again, due to the robo-signing scandal, this may not be as easy to produce.
Rights of redemption
Homeowners in Missouri are entitled to attend a foreclosure sale. However, if the borrower wishes to regain control of their home, there are some specific rules in Missouri called “rights of redemption” that must be adhered to. Homeowners who intend to exercise these rights must do so within 20 days of the foreclosure sale. At that time, they must be also willing to place bond in specific amounts as explained in Missouri Revised Statutes, Chapter 443.420.
When lenders complete a foreclosure sale, the sale price may be less than the amount that is owed on the mortgage. In some states, the lender would be allowed to seek a deficiency judgment from the homeowner. Missouri foreclosure laws prohibit lenders from seeking deficiency judgments.
Homeowners who are facing foreclosure are often upset, confused and oftentimes, angry. Knowing how to determine your legal rights in Missouri during a foreclosure can help a homeowner make better decisions. Those who are facing foreclosure should contact a licensed real estate attorney if they have any questions as there may be options available to them as homeowners.