National Conference of Commissioners on Uniform State Laws

211 E. Ontario St., Suite 1300, Chicago, IL 60611
tel 312-915-0195, fax 312-915-0187

For Immediate Release

NEW FORECLOSURE STATUTE COMPLETED

August 5, 2002 – A new act dealing exclusively with the issues of foreclosure of real property has been approved by the National Conference of Commissioners on Uniform State Laws (NCCUSL) at its 111th Annual Meeting just concluded in Tucson, Arizona. The Uniform Nonjudicial Foreclosure Act (UNFA) provides procedures for mortgage foreclosures without judicial involvement.

The basic premise of the UNFA is that nonjudicial foreclosures can be both fair to borrowers and efficient from the viewpoint of lenders, and hence a superior form of foreclosure. In most cases, judicial involvement in foreclosure is unnecessary, simply because there is no dispute between the creditor and debtor.

Foreclosure is intended to accomplish two purposes: to evaluate the property and then to liquidate it. Liquidation is necessary because the lender is generally not in the business of owning real property.

The UNFA provides for three methods of foreclosure. The first is the conventional method by means of an auction sale. With this method both evaluation and liquidation are combined. The second method is foreclosure by negotiated sale, done in much the same way as other real property sales, with the property listed by the creditor with a broker. The third method is foreclosure by appraisal. This method does not liquidate the property, but leaves it in the hands of the creditor, who has the burden of liquidating it after the foreclosure is completed.

With each of these three foreclosure methods, sufficient protections have been included to assure the legitimate interests of all debtors and creditors. Whichever method is chosen by the creditor, the foreclosure cannot occur less than 90 days after the giving of the original notice of foreclosure.

Under the Act, the creditor must send out two notices, the first a notice of default, and the second a notice of foreclosure. Debtors are given 30 days to pay off their debts before a notice of foreclosure is given to them.

Although foreclosures under this Act are expected to proceed without judicial involvement, a party has the right to seek and obtain the intervention of a court.

The drafting committee on the Uniform Nonjudicial Foreclosure Act was chaired by Carl H. Lisman of Burlington, Vermont. Other committee members include: John P. Burton, Santa Fe, New Mexico; Lani L. Ewart, Honolulu, Hawaii; Dale G. Higer, Boise, Idaho; Reed L. Martineau, Salt Lake City, Utah; Robert L. McCurley, Jr., Tuscaloosa, Alabama; and Lisa Kelly Morgan, Hartford, Connecticut. Dale Whitman, of Columbia, Missouri, served as the committee's reporter.

The National Conference of Commissioners on Uniform State Laws is now in its 111th year. The organization comprises more than 300 lawyers, judges, and law professors, appointed by the states as well as the District of Columbia, Puerto Rico, and the U.S. Virgin Islands, to draft proposals for uniform and model laws and work toward their enactment in their legislatures. Since its inception in 1892, the group has promulgated more than 200 acts, among them such bulwarks of state statutory law as the Uniform Commercial Code, the Uniform Probate Code, and the Uniform Partnership Act.

For further information, please contact John McCabe or Katie Robinson at 312-915-0195, or Gabrielle Bamberger at 212-333-5222.