How to avoid foreclosure in North Carolina

How foreclosure works in North Carolina, step by step

1. Missed payments and the 45-day pre-foreclosure notice

   After the federal 120-day wait, your servicer can start. For a home loan on your primary residence, North Carolina also requires the servicer to mail you a notice at least 45 days before it files. The notice lists what you owe to catch up, says you may have other options, and gives contact information for HUD-approved counselors and the State Home Foreclosure Prevention Project. Call 1-888-442-8188 when it arrives.

   N.C.G.S. §§ 45-102, 45-103

2. Notice of hearing is filed and served

   The trustee files a notice of hearing with the clerk of superior court and serves it on you at least 10 days before the hearing, or posts it on the home at least 20 days before if you cannot be served. The notice states the default, the date and place of the hearing, and that free legal help may be available from Legal Aid of North Carolina.

   N.C.G.S. § 45-21.16(a) to (c)

3. Hearing before the clerk of superior court

   The clerk can allow the sale only after finding a valid debt held by the party foreclosing, a default, the right to foreclose, proper notice, that the 45-day pre-foreclosure notice was sent on a home loan, and that military service rules do not bar the sale. If you live in the home, the clerk must ask what the servicer did to work things out and can continue the hearing up to 60 days if more time is likely to resolve it. You do not have to attend, but you can come and contest the evidence.

   N.C.G.S. §§ 45-21.16(d), 45-21.16C

4. Appeal within 10 days

   Either side can appeal the clerk's order to a district or superior court judge within 10 days. To stop the sale while the appeal is pending, you must post a bond, which for an owner-occupied home is set at 1 percent of the principal balance unless the clerk sets a different amount.

   N.C.G.S. § 45-21.16(d1)

5. Notice of sale and the trustee's sale

   The notice of sale is posted at the courthouse at least 20 days before the sale, published in a local newspaper once a week for 2 weeks, and mailed to you at least 20 days before. Sales are held between 10 a.m. and 4 p.m. on a day the clerk's office is open. The trustee can postpone, but the sale must happen within 90 days of the original date or be noticed again.

   N.C.G.S. §§ 45-21.17, 45-21.21, 45-21.23

6. The 10-day upset bid period

   After the sale anyone can file a higher bid with the clerk within 10 days. Each new upset bid starts another 10 days. Until the last period ends, you can still stop the foreclosure by paying the full debt plus the sale expenses. When no new bid comes in, the sale becomes final without any court confirmation.

   N.C.G.S. §§ 45-21.27, 45-21.20, 45-21.29A

7. Deed, order for possession and moving out

   The trustee gives the buyer a deed. If you are still in the home, the buyer can ask the clerk for an order for possession after giving you 10 days' notice. The sheriff then carries it out within 5 days of receiving it and must tell you the approximate time first. Plan your move before this point.

   N.C.G.S. §§ 45-21.29(k), 45-21.29(l), 42-36.2

North Carolina foreclosure deadlines to know

These are the periods written into the law. Your own dates are on the notices you received. If a notice and this page disagree, trust the notice and ask a counselor or lawyer.

Your rights as a homeowner in North Carolina

Other North Carolina protections

• 45-day pre-foreclosure notice and state certification

  For a home loan on your primary residence, the servicer must mail you a notice at least 45 days before filing and report it to the courts system. The filing must certify this was done, and a materially false certification is grounds to dismiss the case and make the filer pay your costs.

  N.C.G.S. §§ 45-102, 45-103, 45-107

• Court order needed before any sale

  Even without a lawsuit, a trustee cannot sell your home until the clerk of superior court holds a hearing and makes the required findings. The clerk can continue the hearing up to 60 days if you live in the home and more time could resolve the default.

  N.C.G.S. §§ 45-21.16(d), 45-21.16C

• Payoff statement and account history from your servicer

  The holder must confirm that you were mailed a detailed statement of what it claims you owe within 30 days of the notice of hearing. You can also ask your servicer in writing for an account statement (answer due in 10 business days) and a full 2-year payment history and copy of the note (25 business days).

  N.C.G.S. §§ 45-21.16(c)(5a), 45-93

• Military service protection

  A power of sale cannot be used during, or within 90 days after, a borrower's military service if the loan began before that service. The clerk cannot hold the hearing without a certification about this.

  N.C.G.S. § 45-21.12A

• Ban on upfront fees for foreclosure help

  Taking a fee in advance for foreclosure assistance before all promised services are done counts as illegal debt adjusting in North Carolina, unless the person is a North Carolina licensed attorney not working for a debt adjuster.

  N.C.G.S. §§ 14-423, 14-424, 14-426

North Carolina mortgage assistance programs

If the home is sold for more than you owe

Sale money is used first for the costs of the sale, then unpaid property taxes and assessments, then the foreclosed loan. Any surplus goes to the people entitled to it. If the trustee does not know who that is, cannot find them, or there are competing claims, the trustee pays it to the clerk of superior court. You can then start a special proceeding before the clerk to claim it, and if someone disputes your claim, a judge decides. Keep the trustee informed of your address so you can be found.

N.C.G.S. §§ 45-21.31, 45-21.32

Ways to avoid foreclosure

Most of your options come from federal rules and from whoever owns or insures your loan, so they work the same way in North Carolina as anywhere else. What changes by state is how much time you have to use them.

• Repayment plan
• Forbearance
• Payment deferral or partial claim
• Loan modification
• Reinstatement
• Short sale
• Deed in lieu of foreclosure
• Chapter 13 bankruptcy