If you take out a mortgage loan in a state that allows nonjudicial foreclosures, you'll likely sign a deed of trust or a mortgage. This document probably has a power of sale clause. A "power of sale" clause gives the trustee or another party, like an attorney, the right to sell the home through an out-of-court process if you stop making payments.
Most states require that the foreclosing party (called "the lender" in this article) serve one or more notices to the borrower before holding a foreclosure sale. In a nonjudicial foreclosure, borrowers sometimes receive a Notice of Default and a Notice of Sale, depending on state law.
If the lender fails to comply with the procedural notice requirements under state law, you might have a foreclosure defense. The most common grounds for challenging a foreclosure in this way are claiming that the lender failed to:
Depending on state law, a nonjudicial foreclosure process sometimes begins when a Notice of Default (NOD) is recorded at the county recorder's office. The NOD serves as public notice that the borrower is in default.
The NOD often contains:
If the borrower does not "cure" the default by bringing the payments up to date, including late charges and foreclosure fees, the trustee might (again, depending on state law) then prepare and file a Notice of Sale for the property.
Most state foreclosure laws, judicial and nonjudicial, require that the lender serve a notice of the foreclosure sale date on the borrower. State laws also usually require the lender to publish the sale date, typically in a local newspaper.
The Notice of Sale (NOS) generally states:
The NOS might be recorded in the county land records, mailed to the borrower, published in a newspaper of general circulation in the county where the home is located, and posted on the property and in a public place.
While you might get both a Notice of Default and a Notice of Sale as part of the nonjudicial foreclosure process where you live, foreclosure procedures and the documents you'll receive vary widely from state to state.
You might get:
For an overview of the foreclosure laws in your state, click on the link to your state in our Summary of State Foreclosure Laws article.
Often, state law requires the lender to send the borrower the required foreclosure notices by mail. State law might require the servicer to send the notice in a particular way, such as by certified mail and first-class mail. Generally, in most states, it is presumed that you received the notice if the lender can prove that it mailed a properly-addressed notice, such as with postal records or a certified mail receipt.
But if the lender can only produce a copy of a notice—but not proof of mailing—that failure might lead a court to believe that the lender didn't actually mail the notice. If the lender failed to mail a required notice, this failure could provide a strong defense to a foreclosure.
Whether sending an electronic notice, such as by email, is legal depends on applicable federal laws, such as the E-Sign Act (applicable when a lender seeks to satisfy a requirement for a written notice with an electronic record) and on state laws. For example, if a state statute requires a particular foreclosure notice to be sent in writing or by a certain mail-delivery option, the servicer must mail it.
As of January 1, 2023, the standard Fannie Mae and Freddie Mac security instruments (mortgages and deeds of trust) say, "Unless another delivery method is required by Applicable Law, Lender may provide notice to Borrower by e-mail or other electronic communication." But the federal E-Sign Act requires foreclosure notices to be in writing. So, if you sign a mortgage or deed of trust that has this language, a foreclosure notice that was served electronically wouldn't be valid if your state's laws required the notice to be delivered in writing. But the E-Sign Act doesn't prohibit states from enacting laws authorizing the use of electronic notices in foreclosures.
This area of law is complicated. Talk to a lawyer to find out what communications (if any) may be sent to you electronically during a foreclosure.
The lender's failure to send a required foreclosure notice typically prevents the continuation of the foreclosure process. But you'll have to raise this issue in court.
Even if your lender served you a particular foreclosure notice, a court might find the notice invalid for some reason. Most courts require lenders to strictly comply with foreclosure statutes and contractual requirements for foreclosure notices, especially in nonjudicial foreclosures, because of the absence of court oversight.
Courts have found notices of default and notices of sale invalid when they failed to correctly identify the information that state law requires (such as the lender or another party that the law requires to be designated in the notice.) Notices sent that violate state timing requirements have also been declared invalid.
The terms of your mortgage loan documents might set additional requirements for a notice of default or notice of sale beyond those in your state's statutes. The lender's failure to comply with these contractual terms might provide you with a defense against a foreclosure.
In most cases, you must raise a defense of noncompliance with notice requirements in court before the foreclosure is complete. If the foreclosure sale has already happened, you might be limited to monetary damages.
Still, whether you can have a foreclosure sale set aside depends on the facts and the laws in your state. You might have to show significant irregularities in the foreclosure, other flaws in the process, or that you suffered some harm because of the defective notice.
If you're facing a foreclosure and want to learn the specific procedures and what notices are required in your state, as well as about your rights during the process and whether you have any potential defenses to the foreclosure, talk to a local foreclosure attorney as early in the process as possible.