In Alaska, lenders may foreclose on deeds of trusts or mortgages in default using either a judicial or non-judicial foreclosure process.
Judicial Foreclosure
The judicial process of foreclosure, which involves filing a lawsuit to obtain a court order to foreclose, has been instituted more since the late 1980's, when lenders found that they were foreclosing on residential property worth substantially less than the amount owed. Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder.
In the case of judicial foreclosure, the process is carried out according to the rules of equity, deficiency suits are permitted and the borrower has no rights of redemption.
Non-Judicial Foreclosure
The non-judicial process of foreclosure is used when a power of sale clause exists in a mortgage or deed of trust. A "power of sale" clause is the clause in a deed of trust or mortgage, in which the borrower pre-authorizes the sale of property to pay off the balance on a loan in the event of the their default. In deeds of trust or mortgages where a power of sale exists, the power given to the lender to sell the property may be executed by the lender or their representative, typically referred to as the trustee. Regulations for this type of foreclosure process are outlined below in the "Power of Sale Foreclosure Guidelines".
Power of Sale Foreclosure Guidelines
If the deed of trust or mortgage contains a power of sale clause and specifies the time, place and terms of sale, then the specified procedure must be followed, provided it meets the minimum protection laws set forth by the State of Alaska. Otherwise, the non-judicial power of sale foreclosure is carried out in the following three phases:
- The trustee must record a notice of default in the office of the recorder of the recording district in which the property is located not less than thirty (30) days after the default and not less than three (3) months before the sale.
Said notice of default must state the name of the borrower, the book and page where the deed is recorded and it must describe the property, the borrower’s default, the amount the borrower owes, and the trustee’s desire to sell. It must also state the date, time and place of the sale.
Within ten (10) days after recording the notice of default, the trustee must mail a copy of the same by certified mail to the last know address of (1) the borrower, and (2) any person whose claim or lien on the property appears of record or is known to the lender of trustee and (3) any occupant. The trustee may have the notice delivered personally instead of sending it by certified mail.
- Any time before the sale, the borrower may cure the default and stop the sale by paying a sum equal to the missed payments plus attorney’s fees. The lender may not require the borrower to pay off the entire remaining principal balance of the loan to cure the default, just the missed payments and attorney’s fees. If the lender has recorded a notice of default two or more times, then the Alaska statutes provide that the lender can refuse to accept the borrower’s monies for the missed payments and attorney’s fees and proceed with the foreclosure sale instead.
- The sale must be made at a public auction held at the front door of a courthouse of the superior court in the judicial district where the property is located. The trustee must sell to the highest and best bidder and the lender may bid at auction.
The trustee may postpone sale of all or any portion of the property by delivering to the person conducting the sale a written and signed request for the postponement to a stated date and hour. The person conducting the sale shall publicly announce the postponement to the stated date and hour at the time and place originally fixed for the sale. This procedure shall be followed in any succeeding postponement.
When this type of foreclosure process is used, the borrower has a right to redeem the property and deficiency suits are not allowed.
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Cities within Alaska we Avoid Foreclosure and Stop Foreclosure in
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