If you’re having trouble making your mortgage payments and you live in Alaska, it’s important to understand some of the basics about foreclosure, including:
This article outlines some of the most important aspects of Alaska’s foreclosure laws.
Once you quit making your mortgage payments, the loan servicer (the company that handles your mortgage account on behalf of the loan owner) usually can’t start a foreclosure right away. Under federal law, homeowners typically get some time to try to recover financially or otherwise work out a way to avoid foreclosure.
In most circumstances, federal law requires the servicer to wait until your payment is over 120 days late before making the first notice or filing under state law to begin the foreclosure. (To learn more about the federal law that delays the start of a foreclosure, see How Soon Can Foreclosure Begin?)
In Alaska, most foreclosures are nonjudicial, which means they take place outside of the court system with a third party called a "trustee" handling the entire process. (An Alaska foreclosure can be judicial—through the courts—but most of the time the process will be nonjudicial.)
While the trustee has to record a notice of default in the land records and publicly publish a foreclosure sale notice, in most cases, the only notice that the homeowner gets is a mailing.
Notice of Default. To officially begin an Alaska foreclosure, the trustee records a notice of default in the appropriate recording district at least 30 days after the default, but not less than 90 days before the sale. Then, the trustee mails a copy to the borrower and certain other parties by certified mail within ten days after recording the notice. (Alaska Stat. § 34.20.070).
Notice of sale. The trustee has to post a notice of sale in three public places within five miles of where the foreclosure sale will happen at least 30 days before the foreclosure sale, publish the notice in a newspaper once a week for four weeks before the sale, and publish the notice on the Internet starting at least 45 days before the sale date. (Alaska Stat. § 09.35.140).
In a nonjudicial foreclosure, Alaska law permits the borrower to reinstate (get current on) a defaulted loan at any time before the sale date. But if the trustee filed two or more previous notices of default and the borrower reinstated each time, the trustee can refuse to accept a later reinstatement. (Alaska Stat. § 34.20.070).
Some states have passed a law that allows a foreclosed borrower to get the home back after a foreclosure sale by reimbursing the new owner for the full amount paid at the foreclosure sale or, in some cases, the full amount of the mortgage debt. This process is called "redeeming" the property.
In an Alaska nonjudicial foreclosure, though, a foreclosed borrower doesn’t get the opportunity to redeem the home following the sale unless the deed of trust (the loan contract) expressly gives the borrower a right of redemption. (Alaska Stat. § 34.20.090).
The majority of deeds of trust in Alaska don’t provide this right.
When a lender forecloses on a mortgage, the total debt the borrower owes to the lender frequently exceeds the foreclosure sale price. The difference between the sale price and the total debt is called a deficiency. For instance, say the total debt owed is $200,000, but the home sells for $150,000 at the foreclosure sale. The deficiency is $50,000.
In some states, the lender can seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount (in our example, $50,000) from the debtor by doing such things as garnishing the borrowers’ wages or levying the borrowers’ bank account. (Learn about how creditors enforce judgments.)
Under Alaska law, deficiency judgments aren’t allowed following a nonjudicial foreclosure. (Alaska Stat. § 34.20.100). But if the lender pursues a judicial foreclosure, a deficiency judgment is permitted. (Alaska Stat. § 09.45.180).
To look up Alaska’s foreclosure laws for yourself, go to the Alaska Statutes §§ 34.20.070 to 34.20.100.
If you’re facing a foreclosure in Alaska and need more information about the process, want to find out if you have any defenses to the foreclosure, or think the foreclosing party hasn’t followed all of Alaska’s foreclosure laws, consider talking to a foreclosure lawyer.