If you’re facing a foreclosure in New Mexico, it’s important to understand how the process works so you aren’t caught off guard. To learn about each step in a New Mexico judicial foreclosure and get valuable information about your rights during the process, read on. (To learn what to do—and what not do—if you’re facing a foreclosure, see Foreclosure Do’s and Don’ts.)
Federal and state laws theoretically establish a structured, predictable foreclosure process and timeline. Unfortunately, lenders and servicers sometimes make mistakes and violate the law when processing foreclosures. So, it’s a good idea for homeowners facing a foreclosure in New Mexico to understand the specifics of both federal and state laws and procedures.
If the lender or servicer violates the law, the homeowner could potentially have a defense to the foreclosure.
Under federal law, homeowners get certain protections both before and during the foreclosure process. For one thing, the servicer usually can’t start the foreclosure process until the homeowner is more than 120 days late on payments. For another, the servicer has to give the homeowner information on ways to avoid foreclosure. Specifically, the servicer must attempt to contact the homeowner by phone no later than 36 days after the homeowner fails to make a payment—and in writing no later than 45 days after missing a payment—to discuss options that might resolve the problem. (To learn more about federal foreclosure laws, including those that protect homeowners after the foreclosure starts, see Federal Laws Protecting Homeowners: Foreclosure Protections.)
Most foreclosures in New Mexico are judicial, which means a court handles the process. In limited cases, foreclosures can be nonjudicial. Because most foreclosures in the state are judicial, this article covers that process.
Before the foreclosure begins, the homeowner gets a notice of the right to cure and some homeowners get access to programs designed to help them avoid foreclosure.
Notice of the right to cure. The lender has to deliver a notice of the right to cure the default to the homeowner at least 30 days before filing the lawsuit. The notice must inform the homeowner of:
If the homeowner fails to cure the default by the deadline, the lender may file suit and demand full payment of the home loan. (Demanding repayment of the entire debt is commonly called “acceleration” of the loan. In New Mexico, the homeowner can reverse the acceleration and reinstate the loan by curing the default.)
Foreclosure avoidance options. Certain judicial districts in New Mexico have enacted free or low-cost programs to help homeowners negotiate options for avoiding foreclosure. To find out if such a program exists in your judicial district, ask a local attorney.
A New Mexico foreclosure officially begins when the lender files a lawsuit.
Complaint. At least 30 days after the lender sends the notice of the right to cure and 120 days after the delinquency (in accordance with federal law), the lender begins the lawsuit by filing the initial pleading, called a “complaint.”
Summons and service. After the lender files the complaint with the court, the complaint is served on the homeowner, along with a summons. The summons tells the homeowner about the suit, how to contact the lender’s attorney, and that the deadline to file a response to the suit (called an “answer”) is 30 days after receipt of the complaint and summons. Failing to file a timely answer will likely result in a default judgment for the lender. Homeowners who want to save their home are strongly advised to consult with an attorney about the judicial foreclosure process as soon as possible after getting notice about the suit, if not before.
Judgment. If the homeowner doesn’t respond to the lawsuit—or responds, but loses the case—the court will enter a judgment against the homeowner. Solutions for avoiding foreclosure can be possible even after judgment so homeowners don't necessarily have to stop negotiating for a workout option just because the court enters a judgment.
After the court enters a judgment, a public auction of the home is scheduled. Notice of the sale is published in a local newspaper for four weeks before the sale. (N.M. Stat. Ann. § 39-5-1).The auction typically happens at the courthouse in the county where the property is located, but no sooner than 30 days after judgment is entered.
Once the sale is final, the court applies the proceeds of the sale to the homeowner’s debt. If the proceeds fail to completely satisfy the amount owed, the lender may seek a deficiency judgment against the homeowner.
In New Mexico, homeowners who lose their home to a foreclosure have the right to repurchase the property from the foreclosure buyer. This right is called a “right of redemption.” The terms of the mortgage contract typically limit the redemption period to one month; otherwise, the redemption period is nine months. If the redemption period is one month, state law allows the homeowner to request that the court extend the period. (N.M. Stat. Ann. §§ 39-5-18, 39-5-19).
If you want to read New Mexico’s foreclosure laws for yourself, go to Chapter 39, Article 5; Chapter 48, Article 7; Chapter 48, Article 10; and Chapter 58, Article 21A of the New Mexico Statutes, which provide many of the procedural requirements for foreclosures.
If you need help understanding the law, want to file an answer to the suit, or have questions about your particular circumstances, consider contacting a local foreclosure attorney. Homeowners facing foreclosure are also encouraged to contact a HUD-approved housing counselor.