In North Carolina, 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, is used when no power of sale is present in the mortgage or deed of trust. Generally, after the court declares a foreclosure, your home will be auctioned off to the highest bidder. 

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".  The vast majority of foreclosures occuring in North Carolina are Non-Judicial Foreclosures.

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. However, in North Carolina, a preliminary hearing must be held before a power of sale foreclosure can take place.

After the preliminary notices have been issued, the clerk of the court will conduct a hearing to determine whether or not a foreclosure sale may take place. If and when the clerk issues a notice of sale, the foreclosure may proceed as follows:

1. A notice of sale must be: 1) mailed first class mail to the borrower at least twenty (20) days before the sale; 2) published in a newspaper of general circulation in the county where the property is located once a week for two (2) successive weeks, with the last ad being published not less than ten (10) days before the sale; and 3) posted on the courthouse door for twenty (20) days prior to the foreclosure sale.
   
   Said notice must name the borrowers, the lenders, provide a description of the property and state the date, time and place of sale.
   
2. The sale must be conducted at the courthouse in the county where the property is located between the hours of 10:00 am and 4:00 pm. The property will be sold to the highest bidder. Upset bids may be filed with the court clerk for a period of ten (10) days after the foreclosure sale.
   
3. The sale may be postponed by announcing the need to postpone at the time and place the regular sale would have taken place. A notice of the postponement, stating the new date and time the foreclosure sale will be held, must be posted on the courthouse door.

Lenders may pursue a deficiency judgment and borrowers retain the right to redemption.

Right to redemption means that at any time before the foreclosure sale takes place, the homeowner may redeem, or keep ownership of the house by paying in full the amount of principal, interest, and fees owed to their lender, as well as the lender's attorney fees.  This right of redemption also continues during the "upset bid period".

The Upset Bid Period is a 10 day period after a foreclosure sale has taken place.  The day after the foreclosure sale is recorded counts as Day 1. Saturday and Sunday are also counted; however, if Day 10 falls on the weekend or a holiday, the next working day shall be counted as Day 10.  During this time, bidders may raise the amount that the property auctioned for by placing an "upset bid", which restarts the 10 day period from the date of the  upset bid.  It is important for you to understand that during this period of time, you as the homeowenr still have your right of redemption no matter how many times the bid is upset, until the final 10 day period expires.

For North Carolina Foreclosure Law & Statutes, CLICK HERE

For the National Consumer Law Center's 68 Page Report on Equity Stripping Foreclosure Rescue Scams, CLICK HERE