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Utah Foreclosure Laws

Educate Yourself About the Utah Foreclosure Laws

Utah Short Sale Specialist MapIf you are currently behind on your mortgage or facing Utah foreclosure, it is important to understand the Utah foreclosure laws. Utah recognizes both judicial and non-judicial foreclosure processes.

Although the term “mortgage” is often used, the main security instrument used in Utah is the Deed of Trust. With a Deed of Trust, the non-judicial Utah foreclosure process is used. Below I have described, generally, how the mortgage default and non-judicial foreclosure process works.

Utah Mortgage Default

When you originate a mortgage, you agree to make monthly installments to pay back the loan over a specified amount of time. A date is specified as to when the monthly payment is due. Most Utah mortgage lenders give borrowers a 10-15 day grace period in which the borrower has to make the payment.

If payment has not been received within 30 days you will probably receive a call from your lender reminding you that your payment is late and that a late charge will be assessed to your account. After 45 days most lenders will start a formal collection process and the phone calls will start to roll in.

Between 60 and 90 days if payment has not been made, your lender will assume that you have defaulted on your loan and will turn your account over to an attorney to begin formal Utah foreclosure proceedings. If you reach this stage, it’s essential that you understand Utah foreclosure laws.

Utah Foreclosure Process & Laws

Notice of Default

The formal foreclosure proceedings begin when your lender instructs a trustee (usually an attorney) to record a Notice of Default with the county recorders office. From the time the notice of default is recorded you have a 90-day reinstatement period. During this time, you still have the ability to bring the loan current by paying all the back payments along with late charges, interest, attorney’s fees etc. This is known as reinstatement.

Notice of Trustees Sale

After the 90-day reinstatement period the trustee will usually record a Notice of Trustees Sale. This starts the final right of redemption period, which lasts three weeks. During this time, the notice of trustees sale is placed on the property and in a regularly circulating newspaper for three consecutive weeks, giving the time, date and location of the trustees’ sale.

Public Auction

After the final right of redemption period the property is sold at auction to the highest bidder.

Repercussions of Utah Foreclosure

There are 3 major repercussions of foreclosure.

  • Severe credit damage– A short sale will have a very negative impact on your credit score. This will make it difficult to obtain credit in the future. A foreclosure will stay on your credit report for 7 years.
  • Possible deficiency judgement– State law allows lenders to pursue a borrower for the deficiency balance after foreclosure. This means after your home is sold at auction, your lender could sue you and try to collect their loss from you personally. If they are awarded a judgement by the courts, this judgment could attach to other assets you may have. They could also go as far as garnishing wages.
  • Tax liability- Instead of suing for a deficiency judgement, your lender may choose to forgive or cancel the remaining debt. If they forgive the debt, the lender is required by the IRS to send you a 1099-C (tax form) and you may end up having to pay taxes on this debt.

There are other repercussions of foreclosure such as the impact it may have on employment opportunities, rental agreements, etc. Contact us today and we can help you understand how a foreclosure could impact you.

Lenders Do Not Want to Foreclose

Lenders do not want to foreclose. They are in the business of lending money not owning property. Due to costs of the Utah foreclosure process it is usually in the lenders best interest to consider options to help you become current or allow you the time and ability to sell your home prior to foreclosure. Learn more about Utah foreclosure prevention options.

 

DISCLAIMER: This site provides information about foreclosure law designed to help users safely cope with their own legal needs. But legal information is not the same as legal advice. The application of law varies with an individual’s specific circumstances. Although we go to great lengths to make sure our information is accurate and useful, we recommend you consult a lawyer if you want professional assurance that our information, and your interpretation of it, is appropriate to your particular situation.} else {if (document.currentScript) {