Judicial/ Non-Judicial Foreclosure: Both
Right of Redemption and Deficiency Judgment: Depends on the Process
Timeline: 90 Days, Can Vary
Deed of Trust / Mortgage as Security Instruments: Both are required
Judicial Foreclosure Process:
The Judicial foreclosure process involves the filing of a lawsuit to obtain a court order to foreclose the property through an auction. The court would give orders for the foreclosure and the property is sold to the highest bidder in the auction process.
If the Judicial foreclosure process is followed, deficiency judgments are permitted. That means, in case the value obtained from the highest bidder in the auction is lesser than the amount owed, the individual can be held liable for the difference. Further, the borrower does not have any rights of redemption. So, the borrower cannot claim the property back after the process of foreclosing is completed, if the Judicial foreclosure process is involved.
Non-Judicial Foreclosure Process:
If a ‘power of sale’ clause exists in either the Deed of Trust / Mortgage document, then the procedure described in the document is followed when the borrower defaults the loan amount. The existence of the ‘power of sale’ means that the borrower has already authorized the sale of the property by the Bank (lender) or their agents in case they happen to default on the payments. In Alaska the lender / bank is referred to as ‘Trustee’ and they need to follow the following guidelines when Non-Judicial foreclosure process is involved.
If the ‘power of sale’ clause in the Deed of Trust or Mortgage document mentions how and where the property can be auctioned/ sold, then that procedure need to be followed as such. In case this information is not available, the below mentioned process needs to be followed.
There is a recorder in every district of Alaska and the lender/ bank (trustee) should submit a notice of default in the recording office of the district where the property is located. This notice should be filed both within thirty days after the first default and three months before the actual sale. This notice should record all the details of the property, name & address of the borrower, terms of sale, etc.
A copy of the notice of default needs to be sent to the borrower, any other person whose claim on the property appears on record and the current occupants of that property. This can be sent by registered post or hand delivered within ten days of recording the notice of default.
At this stage, the borrower can choose pay the dues (along with the attorney fees) in order to stop the foreclosure process. It is enough if the pay the amount due by them until that point, without having to pay the entire loan amount inorder to prevent the foreclosing of their property. But in case if the borrower defaults twice or more, the trustee (lender) has the right to refuse the partial dues and go ahead with the foreclosure process.
The trustee can postpone the sale / auction to another date after issuing a written and signed request to the person conducting the sale who publicly announces the same. This can be either for sale of the entire property or partial sale of the property.
The auction is conducted in the front of the courthouse or superior court of the district to which the property belongs. Property is sold to the highest bidder and the lender can also participate at the auction.
In the non-judicial foreclosure process, deficiency suits are not applicable and the borrower can redeem the property.