District of Columbia Foreclosure Law
Washington DC Foreclosure Law dictates that all matters pertaining to the foreclosure of properties will be done through a Non-Judicial process. There is no need for lenders to seek a court order to foreclose mortgages in default, unlike in other states where the Judicial Foreclosure process is almost always available. The court will only have a hand in the proceedings should there be any unclear or unspecified requisites in the deed of trust. The typical time of process last about 60 days and the Deed of Trust is the primary security instrument recognized. In Washington DC, lenders may sue for Deficiency Judgments and the borrowers are not given any Right of Redemption.
Non-Judicial Foreclosure is used when a power of sale clause is expressed in the mortgage or in the deed of trust. “Power of Sale” is the process wherein the borrower agrees to sell the property in dispute to settle the remaining balance from a loan in case of default. Its most obvious difference from the judicial foreclosure is that it doesn’t need any court order to auction off the property as it is already stated in the security instruments. The lender or their duly designated representative, commonly referred to as the “trustee,” may execute the “power of sale.”
Power of Sale Foreclosure Guideline
Should the mortgage or the deed of trust contain a power of sale clause, and specifies the time, place, and terms of the foreclosure sale, then the terms and procedures specified therein should be strictly followed. However, should there be any information lacking in the deed of trust, the lender or the trustee must elevate the matter to the court. The court will then issue an order specifying the terms of the foreclosure sale.
It must be remembered that before any foreclosure proceedings get underway, the lender must first send the borrower a copy of the Notice of Intent to Sell. This notice must be sent through certified or registered mail, return receipt requested, to the borrower’s last known address. Another copy of the notice must also be sent to the Mayor of the District of Columbia, or to his duly authorized representative, if any. The two notices must be sent at least 30 days before the foreclosure sale. The 30 day countdown will begin on the day that the Office of the Mayor receives a copy of the notice. This notice of intent to sell is in addition to any other notices that may be required by the court, the mortgage, or the deed of trust.
The foreclosure sale is normally held through a public auction where the property is sold to the person making the highest bid for cash. With the exception of the trustee, the bidding process is open to anyone, including the lender.
In Washington DC, lenders may file a lawsuit in order to obtain a deficiency judgment. This occurs when the foreclosed property’s selling price is lesser than the total amount owed by the borrower. The borrower has no right of redemption and, therefore, forfeits all further claims to the property once the sale has been consummated.
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