North Carolina Foreclosure Procedure Notes
Documents Needed at Referral
Copy of Recorded Deed of Trust (DOT)
Copy of Note with Endorsements
Copy of Title Policy
Copy of Assignments/Allonges (an attachment to a legal document that can be used to insert language or signatures when the original document does not have sufficient space for the inserted material)
Copy of Appraisal
NCGS 45-93 Written Compliance response
Payoff figures for NCGS 45-21.16(c)(Sa) notice
This letter also includes information on Fair Debt Collection Practices.
Home Loan/Non-Home Loan Certificate, if applicable
45-day pre-foreclosure notice and/or 30-day breach letter
If our office sends you the 45-day pre-foreclosure notice, we need a reinstatement figure.
Foreclosure Process
A. Substitution of Trustee (SOT): executed by the holder of the note
B. Notice of Hearing (NOH): to person(s) directed in the deed of trust
C. Service: certified mail or in person by Sheriff - 20\text{ days} on the property, 10\text{ days} to the mortgagor (borrower)
D. Clerk of Court is the presiding official
E. Affidavit of Indebtedness
Hearing before the Clerk of Court
To authorize the foreclosure sale, the Clerk must find the existence of:
1. A valid debt of which the party seeking to foreclose is the holder;
2. Default;
3. Right to foreclose under the instrument;
4. Notice to those entitled to notice;
5. That the underlying mortgage debt is not a home loan as defined in G.S. 45-101(lb), or if the loan is a home loan under G.S. § 45-101(lb), that the pre-foreclosure notice under G.S. § 45-102 was provided in all material respects, and that the periods of time established by Article II or Chapter 45 of the General Statutes have elapsed;
6. That the property is occupied by the borrower as his/her principal residence, and the lender has complied with the requirements of G.S. § 45-21.16C or that the property is not occupied by the borrower as his/her principal residence and therefore G.S. § 45-21.16C is inapplicable; and
7. That the sale is not barred by G.S. 45-21.12A.
Contested Issues / Appeals
Two issues that are contested most often:
Whether the party seeking to foreclose is the holder of the Note
Whether the borrower is in default
In North Carolina, the default amount is irrelevant for a Clerk's foreclosure hearing. If the borrower is 1.00 behind, the Clerk shall enter the Order allowing the foreclosure sale to proceed.
Continuance Authority
NC G.S. § 45-21.16C provides Clerks authority to continue a foreclosure hearing for up to 60\text{ days} if the residence being foreclosed is the borrower's principal residence, and the Clerk determines there is good cause to believe that additional time or additional measures have a reasonable likelihood of resolving the delinquency without foreclosure.
Notice of Sale
A copy of the Notice of Sale is posted at the courthouse immediately after the hearing before the Clerk of Court.
We send a copy of the Notice of Sale by First Class Mail to the following:
Any person who has filed a Request for Notice (RFN): a person who has filed an RFN is entitled to notice of the sale at least 20\text{ days} prior to the sale date.
Current Occupant: must be given 20\text{ days} notice of the sale.
Large Judgment: we send a copy of the Notice of Sale to the judgment holder.
Junior Lienholder: we send a copy of the Notice of Sale to the IRS by U.S. Certified Mail, return receipt requested. If an IRS lien was filed 30 or more days before the sale date, we are required to provide the IRS with notice of the sale at least 25\text{ days} before the sale date.
Sale
A. The sale takes place at the courthouse. If a third-party bidder is the high bidder, he is required to deposit 5\% of his bid in certified funds with the person holding the sale. We generally give a third-party bidder 30\text{ days} to pay the full balance of his bid.
B. There is a 10\text{-day} redemption and upset bid/confirmation period in North Carolina that runs concurrently. A sale is not "confirmed" until there has been 10 consecutive days with no upset bids having been filed. Once the sale has been confirmed, the rights of the parties become fixed, and the purchaser is entitled to a Trustee’s Deed upon payment of the balance of the bid.
Redemption and Upset Bid
A. Redemption: During this 10\text{-day} period, the borrower has the right to pay the loan in full and "redeem" the property.
B. Upset Bid: During these 10\text{-day} days, any person may file an upset bid with the Clerk of Court. The upset bid must be at least 5\% more than the last bid, and the person placing the bid must deposit 5\% of his bid with the Clerk's office. The 10\text{-day} period starts over again after each upset bid is placed and continues until 10 consecutive days have passed without an upset bid being filed.
Loss Mitigation & NCCOB Rule 702
NCCOB Rule 702 (a): Mortgage servicers must acknowledge, in writing, a borrower's request for loss mitigation no later than 10\text{ business days} after the request.
(b): Respond to a loss mitigation request from a borrower no later than 30\text{ business days} after the receipt of all information necessary from the borrower to assess whether the borrower qualifies for any loss mitigation programs offered by the servicer.
(c): Include in a final response denying a loss mitigation request the reason for the denial and contact information for a person at the servicer with authority to reconsider the denial.
Connections to Foundations / Real-World Relevance
The process described reflects non-judicial foreclosure in North Carolina under specific General Statutes (G.S.).
Key milestones include: documentation review (DOT, Note, Title Policy, assignments/allonges, appraisal), pre-foreclosure notice, a Clerk-of-Court hearing, a Notice of Sale, the actual sale, and post-sale rights (redemption and upset bids).
The process emphasizes due process (notice to occupants and interested parties), the lender’s burden to prove debt and default, and protective periods for borrowers (redemption, upset bids).
Loss mitigation timelines (NCCOB Rule 702) illustrate statutory expectations for borrower servicer responses, highlighting practical relevance for borrowers seeking relief options.
Practical and Legal Implications
The default amount is not dispositive at the Clerk’s hearing, which shifts focus to existence of default and holder status.
Continuances under G.S. § 45-21.16C can delay foreclosure when the residence is the principal home and there is potential to resolve delinquency without sale.
Notice requirements (20 days to occupants, 20 days to RFN recipients, 25/30 days for IRS notices) create formal timelines that influence borrower strategy and creditor planning.
The redemption and upset bid framework creates a formal market dynamic around the bid price, with the possibility of repeated bids resetting the 10-day window.
The sale process culminates in a Trustee’s Deed upon payment of balance, transferring rights to the purchaser if redemption is not perfected.
Key Statutes & References (mentioned in the transcript)
G.S. § 45-101(lb) (definition of home loan)
G.S. § 45-102 (pre-foreclosure notice)
G.S. § 45-21.16C (continuance authority for principal residence)
G.S. § 45-21.12A (sale not barred)
G.S. § 45-93 (Written Compliance response timeline)
NCCOB Rule 702 (loss mitigation timelines & requirements)
Other references: 45-day pre-foreclosure notice; 30-day breach letter; 20/10/60-day timeframes as detailed above
Quick Reference Timelines (summary)
Pre-foreclosure notice: 45\text{ days} (and/or 30\text{ days} breach letter)
Service deadlines: 20\text{ days} on property; 10\text{ days} to mortgagor
Clerk hearing continuance: up to 60\text{ days}
Notice of Sale: delivered at least 20\text{ days} to RFN and occupants; IRS notices at least 25\text{ days} if lien filed 30\text{+ days} prior
Sale deposit for high bidder: 5\% of bid
Redemption/Upset Bid window: 10\text{ days} (can reset with new upset bids)
Loss mitigation response: acknowledgment by 10\text{ business days}; final decision or denial by 30\text{ business days}; must provide rationale and contact for reconsideration