How Foreclosure Works in North Carolina

North Carolina has two methods. Most deeds of trust in the state contain "power of sale" language, which allows a trustee to sell the home after a hearing before the clerk of superior court (filed as a special proceeding); the clerk must authorize the sale first. A lender can instead file a foreclosure by civil action, heard by a judge. The North Carolina Judicial Branch says that under either method, a home cannot be sold without first getting a court order permitting the sale.

For a home loan on a primary residence, the servicer must mail a pre-foreclosure notice at least 45 days before filing the notice of hearing. It must itemize the past-due amounts and other charges needed to bring the loan current, say the borrower may have options other than foreclosure, and give contact information for the servicer, HUD-approved counseling agencies and the State Home Foreclosure Prevention Project. For a power-of-sale foreclosure, a notice of hearing must then be served on the borrower and record owners at least 10 days before the hearing before the clerk (or posted on the property at least 20 days before, if personal service fails); it must describe the default, any right to pay or cure, and the right to appear and contest. After the clerk authorizes the sale, the notice of sale must be posted at the courthouse at least 20 days before the sale, mailed at least 20 days before the sale to those entitled to notice (and to tenants in residential property with fewer than 15 rental units), and published in a newspaper once a week for at least two weeks.

Minimum time frames in a power-of-sale foreclosure of a home loan: the pre-foreclosure notice must go out at least 45 days before the foreclosure is filed, and the Housing Finance Agency may extend that filing date once by up to 30 days; the notice of hearing must be served at least 10 days before the clerk's hearing; the clerk's order may be appealed within 10 days; the notice of sale must be posted and mailed at least 20 days before the sale, with the last newspaper publication no more than 10 days before the sale; and after the sale there is a 10-day upset bid period, restarted by each new upset bid, before the sale becomes final.

The power of sale ends if, before the sale (or before the upset bid period after a sale ends), the owner pays or tenders the full obligation secured by the deed of trust plus the expenses of the sale, including the trustee's compensation. Whether the borrower can instead cure the default by catching up on missed payments depends on the loan documents; the notice of hearing must state any right to pay the debt or cure the default "if such is permitted." The Judicial Branch says borrowers may be able to negotiate a loan modification or other resolution at any time until the sale is final.