Alaska Foreclosure Law

Alaska laws allow both judicial and non-judicial foreclosures. For both types, the process typically lasts 90 days, although this can vary according to the case and the type of foreclosure in effect. Foreclosure officially starts when the lender issues a Notice of Default (also called a notice of non-payment) to the borrower.

Judicial foreclosure
Judicial foreclosure involves filing a lawsuit to foreclose on the property. When the mortgage doesn’t contain a Power of Sale, a clause giving the lender the right to sell the home in case of default, the case has to be filed so that the court can declare a foreclosure. After foreclosure is declared, the home is auctioned off to the highest cash bidder.

A judicial foreclosure also follows the rules of equity. Borrowers are not given a Right of Redemption, which means they cannot regain possession of their home even if they get current. If the foreclosure doesn’t cover the costs of the loan, lenders can also file a deficiency suit—a personal claim against the borrower to pay off the remainder.

Non-judicial foreclosure
Non-judicial foreclosures are more common in Alaska. A non-judicial foreclosure happens outside of court and is used when the mortgage contains a Power of Sale. The clause basically authorizes the lender to sell the home if the borrower defaults, in order to pay off the balance. The right may also be extended to the lender’s representative or trustee.

If the Power of Sale clause specifies the terms of the sale, the mortgage terms must be followed as long as they meet the state’s minimum protection laws. If they don’t, the foreclosure follows a three-phase process:

1) The lender or trustee records a Notice of Default at the district office where the property is located. This must be done at least 30 days after the default, and at least three months before the sale date.

2) Ten days after recording the NOD, the lender sends a copy to the borrower and any other person or occupant with a claim on the property. The copy may be personally delivered or sent by mail. After receiving the notice, the borrower is given a time frame to “cure” the default, usually by settling the past-due payments and the attorney’s fees. This is called the Right of Redemption. If the borrower offers payment after issuing a second NOD, lenders have the right to refuse it and start foreclosure anyway.

3) If the borrower doesn’t get current by the specified sale date, the home is auctioned off in front of a courthouse in the district where the home is located.

Besides giving the borrower a Right of Redemption, non-judicial foreclosures also protect them from deficiency suits by the lender. The process doesn’t allow lenders or their trustees to file personal claims against the borrower if the foreclosure doesn’t cover the amount owed.

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