New Mexico Foreclosure Laws and Procedures

Learn about foreclosure laws in New Mexico and how the New Mexico foreclosure process works.

By , Attorney University of Denver Sturm College of Law
Updated 10/25/2023

Before the foreclosure crisis, federal and state laws regulating mortgage servicers and foreclosure procedures were relatively limited and tended to favor foreclosing lenders. However, many federal and state laws now give protections to borrowers. Servicers generally must provide borrowers with loss mitigation opportunities, account for each foreclosure step, and carefully comply with foreclosure laws.

Also, most people who take out a loan to buy a residential property in New Mexico sign a promissory note and mortgage. These documents give homeowners contractual rights during the foreclosure process.

So, don't get caught off guard if you're about to go through a foreclosure. Learn all about the foreclosure process and foreclosure laws in New Mexico, from missing your first payment to a foreclosure sale.

What Are My Rights During Foreclosure in New Mexico?

In a New Mexico foreclosure, you'll most likely get the right to:

  • receive preforeclosure notice
  • apply for loss mitigation
  • get notice of the foreclosure and the chance to respond in court
  • get current on the loan and stop the foreclosure sale
  • receive special protections if you're in the military
  • pay off the loan to prevent a sale
  • redeem the property after the sale
  • file for bankruptcy, and
  • get any excess money after a foreclosure sale.

Once you understand the New Mexico foreclosure process and your rights, you can make the most of your situation and, hopefully, work out a way to save your home or at least get through the process with as little anxiety as possible.

What Is Preforeclosure?

The period after you fall behind in your mortgage payments, but before a foreclosure officially starts, is generally called the "preforeclosure" stage. Sometimes, people refer to the period before a foreclosure sale happens as "preforeclosure," too.

During this time, the servicer can charge you various fees. Also, federal law says the servicer must usually let you know how to avoid foreclosure. And your mortgage contract might require the servicer to send you a breach letter (a preforeclosure notice).

When Can a New Mexico Foreclosure Begin?

Under federal law, the servicer usually can't officially begin a foreclosure until you're more than 120 days past due on payments, subject to a few exceptions. (12 C.F.R. § 1024.41).

Which Type of Foreclosure Is Permitted in New Mexico?

If you default on your mortgage payments for your home in New Mexico, the foreclosure will most likely be judicial. A nonjudicial foreclosure is allowed in New Mexico if the loan contract is a deed of trust. But this process isn't used too often.

Preforeclosure Requirements Under New Mexico Law

Before the foreclosure begins, you (the borrower) will get 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 you at least 30 days before filing the lawsuit. The notice must inform you of the following:

  • the nature of the default
  • the right to cure the default by paying past-due amounts, including the amount of any unpaid interest and late fees, as well as any interest and late fees that will accrue within 30 days
  • the date by which the homeowner must cure the default to avoid a foreclosure lawsuit
  • the name and address and the telephone number of a person whom the borrower may contact if the borrower disagrees with the assertion that a default has occurred or the correctness of the calculation of the amount required to cure the default. (N.M. Stat. §§ 58-21A-3, 58-21A-6).

This information will likely be included in the breach letter. If you don't cure the default by the deadline, the lender may file suit and demand full payment of the home loan.

Foreclosure Avoidance Options

Some 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.

What Are the Steps Involved in the Judicial Foreclosure Process in New Mexico?

A judicial foreclosure begins when the lender files a lawsuit asking a court for an order allowing a foreclosure sale. The lender gives notice of the suit by serving you a summons and complaint. You generally get 30 days after service to file an answer. If you don't respond to the suit, the lender will ask the court for, and probably receive, a default judgment, allowing it to hold a foreclosure sale.

But if you choose to defend the foreclosure lawsuit, the case will go through the litigation process. The lender might then ask the court to grant summary judgment. A summary judgment motion asks that the court grant judgment in favor of the lender because there's no dispute about the critical aspects of the case. If the court grants summary judgment for the lender or you lose at trial, the judge will order the home sold at a foreclosure sale.

A notice of sale must be published in a newspaper for four weeks before the sale date and posted publicly. (N.M. Stat. § 39-5-1). After the court issues a foreclosure judgment, the sale can't happen for 30 days. (N.M. Stat. § 39-5-17).

How Do Foreclosure Sales in New Mexico Work?

At the sale, the lender usually makes a credit bid. The lender can bid up to the total amount owed, including fees and costs, or it may bid less. In some states, including New Mexico, when the lender is the high bidder at the sale but bids less than the total debt, it can get a deficiency judgment against the borrower. The property becomes "Real Estate Owned" if the lender is the highest bidder.

But if a bidder, say a third party, is the highest bidder and offers more than you owe, and the sale results in surplus funds, you're entitled to that extra money (after all other liens are paid off).

How Long Do You Have to Move Out After Foreclosure in New Mexico?

In most cases, the lender is the high bidder at the foreclosure sale and becomes the property's new owner. The lender can get a writ of assistance to evict the former owner as part of the foreclosure action (judicial foreclosures) or file a separate lawsuit to evict (nonjudicial foreclosures).

What Are the Options Available for Borrowers During Foreclosure in New Mexico?

A few potential ways to stop a foreclosure include reinstating the loan, redeeming the property before or after the sale, or filing for bankruptcy. (Of course, if you're able to work out a loss mitigation option, like a loan modification, that will also stop a foreclosure.)

Reinstating the Loan

Under New Mexico law, you may reinstate the loan at any time before the time title is transferred by means of foreclosure, judicial proceeding and sale, or otherwise. The cure will reinstate you to the same position as if the default had never occurred. (N.M. Stat. § 58-21A-6).

Does New Mexico Have a Redemption Period After Foreclosure?

One way to stop a foreclosure is by "redeeming" the property. To redeem, you have to pay off the full amount of the loan before the foreclosure sale.

Some states also provide foreclosed borrowers with a redemption period after the foreclosure sale, during which they can buy back the home. In New Mexico, 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. § 39-5-18, § 39-5-19).

Filing for Bankruptcy

If a foreclosure sale is scheduled to occur in the next day or so, the best way to stop the sale immediately is by filing for bankruptcy because of the automatic stay. The stay functions as an injunction that prohibits the lender from foreclosing on your home or otherwise trying to collect its debt, at least temporarily.

In many cases, filing for Chapter 7 bankruptcy can delay the foreclosure by a matter of months. Or, if you want to save your home, filing for Chapter 13 bankruptcy might be the answer. To find out about the options available to you, speak with a local bankruptcy attorney.

Foreclosure Protections and Military Servicemembers

The federal Servicemembers Civil Relief Act provides legal protections to military personnel in foreclosure.

New Mexico law extends the rights, benefits, and protections of the federal Servicemembers Civil Relief Act to members of the National Guard ordered to state active duty for a period of 30 or more consecutive state duty days or to any federally funded duty performed in an operational role for homeland security. (N.M. Stat. § 20-4-7.1).

Are Deficiency Judgments Allowed in New Mexico?

In a foreclosure, the borrower's total mortgage debt sometimes exceeds the foreclosure sale price. The difference between the total debt and the sale price is called a "deficiency." For example, if the total debt owed is $450,000, but the home sells for $400,000 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 borrower.

In New Mexico, the lender may seek a deficiency judgment against you as part of a judicial foreclosure.

What Are the Potential Consequences of Foreclosure?

A foreclosure could result in serious consequences, like lower credit scores, a deficiency judgment (as mentioned), or tax ramifications.

Additional Foreclosure Information

For more information on federal mortgage servicing laws and foreclosure relief options, go to the Consumer Financial Protection Bureau (CFPB) website.

Getting Help

If you have questions about New Mexico's foreclosure process or want to learn about potential defenses to a foreclosure and possibly fight the foreclosure in court, consider talking to a foreclosure attorney. Talk to a HUD-approved housing counselor for information about different loss mitigation options.

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