Foreclosure & Alternatives Law
When you find yourself in a bind and cannot make the payments on your home's mortgage, you stand a chance of going into foreclosure. While it will not happen right away, you will eventually be called by the bank that holds your mortgage in trust and they will want to know your plans. The state of Montana allows 150 days before your home can be fully foreclosed on, but that means that you will be notified by the bank after one missed payment. You must make recompense with the bank or they will take your home, claim it and eventually sell it. The sale will most likely be in an auction because the bank needs to regain the money that is owed.
The thing that makes Montana different than any other state is that it has both mortgages and something called a “trust indenture.” The “Small Tract Financing Act of Montana” allows for a trust indenture on tracts of land that are no more 40 acres and, if your mortgage is less than $500,000, you may not need to have an official mortgage.
A trust indenture is held by a company who owns many small parcels of land and, in the interest of allowing banks to foreclose, the trust indenture is a promissory note and is a legal document that cannot be held by the company itself, but by an individual person or couple. If the company issues its promissory notes to a large group of homeowners, the bank doesn't profit at all from pursuing one or two notes. Therefore, the Montana legislature stepped in and made laws that govern this type of transaction. The United Sates Securities and Exchange Commission has to review and approve the indenture document before it is issued, along with other safeguards. If you have a trust indenture and are being foreclosed on, you may want to contact an attorney who knows about this intimately and can assist with any legal actions that have come against you.
In Montana, lenders may foreclose on mortgages and trust indentures that are in default by using either judicial foreclosure or non-judicial foreclosure.
A judicial foreclosure involves filing a lawsuit that allows the court to order the foreclosure. This is typically used for there is no power for the lender to sell listed in the mortgage. A complaint is filed with the court and this is known as a lis pendens. Simply put, this provides public notice that the property will be foreclosed upon. After the judicial foreclosure has occurred the sale of your property takes place and that involves an auction.
The non-judicial foreclosure process is used most often because there is a notice of sale section in the mortgage or trust indenture. A power of sale clause is the section of the mortgage that gives the lender the pre-authorization to sell the property to pay off whatever balance is on the loan in case the borrower defaults of his or her loan. If a power of sale is listed in the mortgage or deed of trust, the lender can legally sell the property through a trustee who acts as the representative of the lender. There are limitations as to who the trustee can be. It must be a lawyer, a bank or a title agent.
When the deed of trust or mortgage has a power of sale clause that directly specifies the time, location and terms of the sale in case of default and foreclosure the exact procedures must be followed. What sets Montana apart from the other states in American is that a non-judicial foreclosure can occur only if the following takes place:
The lender has to record a notice of sale with the clerk of the court in the county in which the property is located within 120 days of the auction. The owner must be notified personally and a notice must be placed on the property 20 days before the sale.
Interestingly, the auction must take place between 9 a.m. and 4 p.m. at the court house or at the trustee's place of business as long as it is in the same county of the property. It is sold to the highest bidder.
If you are being foreclosed on, you may need representation and guidance. Calling an attorney may be a good idea.