How are trust deeds or mortgage liens treated in Missouri?

Missouri primarily operates as a title state where the property title remains in trust until payment in full occurs for the underlying loan. Foreclosure is a non-judicial remedy under this theory. The document that secures the title is called a deed. Missouri law also permits mortgages to serve as liens upon real property and for judicial foreclosures to occur through the courts. Because the power of sale provisions in trust deeds is a faster mechanism to effectuate foreclosure and because there is no right to redemption, this is the primary vehicle used to foreclose.

How are Missouri mortgages foreclosed?

The primary method of foreclosure in Missouri involves what is known as non-judicial foreclosure. This type of foreclosure does not involve court action but requires notice. When the deed of trust is initially executed it will usually contain a provision called a power of sale clause which upon default allows a trustee to sell the property in order to satisfy the underlying defaulted loan. The trustee acts as a representative of the lender to effectuate the sale which typically occurs in the form of an auction. Because this is a non-judicial remedy there are very stringent notice requirements and the legal documents are required to contain the power of sale language in order to use this type of foreclosure method.

Power of Sale Notice Requirements:

1. A notice of foreclosure sale must be published at lease twenty (20) times and continued to the day of sale in the event the property is located in a city of 50,000 inhabitants or more. In other geographical areas publication must occur four at least four successive weeks the last advertisement no more than a week from the date of the sale. Notice requirements are referenced in Missouri Revised Statutes Chapter 443.320.

2. Within 20 days of the date of the sale the trustee must provide notice by registered or certified mail to the borrower and other parties in interest of the sale date and time, the terms of the sale and a description of the property to be sold. Foreclosure sales are to be held between 9AM and 5PM to be deemed commercially reasonable. Sale requirements are referenced in Missouri Revised Statutes, Chapter 443.327.

In Missouri, the lenders can also go to court in what is known as a judicial foreclosure proceeding where the court must issue a final judgment of foreclosure. Usually if the deed of trust does not contain the Power of sale language, the lender must seek judicial foreclosure. The property is then sold as part of a publicly noticed sale. A complaint is filed in court along with what is known a lis pendens. A lis pendens is a recorded document that provides public notice that the property is being foreclosed upon.

What are the legal instruments that establish a Missouri mortgage?

The documents are known as the deed of trust, and in a commercial transaction, a security agreement. Sometimes the mortgage document is combined with the security agreement. Alternatively, a mortgage is filed to evidence the underlying debt and terms of repayment, which is set forth in the note.

How long does it take to foreclose a property in Missouri?

Depending on the timing of the various required notices, it usually takes approximately 60-90 days to effectuate an uncontested non-judicial foreclosure. This process may be delayed if the borrower contests the action in court, seeks delays and postponements of sales, or files for bankruptcy.

Is there a right of redemption in Missouri?

Missouri has an onerous post-sale statutory right of redemption with respect to power of sale foreclosures which would allow a party whose property has been foreclosed to reclaim that property by making payment in full of the sum of the unpaid loan plus costs. There is a one (1) year right of redemption if a foreclosure is obtained by judicial means. In order to exercise the right to redemption however the borrower must provide notice within twenty (20) days after the sale of the intent to redeem and then post a bond for all costs and fees due exclusive of the amount of principal and interest. Redemption rights are referenced in Missouri Revised Statutes, Chapter 443.420.

Are deficiency judgments permitted in Missouri?

No. A deficiency judgment may not generally be obtained when a property in foreclosure is sold at a public sale for less than the loan amount which the underlying mortgage secures.

What statutes govern Missouri foreclosures?

The laws that govern Missouri deed of trust foreclosures are found in Chapter 443.327 Missouri Revised Statutes.

Missouri Revised Statutes

Chapter 443
Mortgages, Deeds of Trust and Mortgage Brokers
Section 443.327

August 28, 2007

Sale by trustee exercising powers under security instrument--times when sale may be held--places where sale may be held.

443.327. The trustee exercising a power of sale granted in any security instrument may in the trustee's discretion set the time for sale at any commercially reasonable time, unless the security instrument specifies an hour at which the sale is to occur. The time for sale will be deemed to be commercially reasonable if the sale is held between the hours of 9:00 a.m. and 5:00 p.m. on the date of sale. If no time is stated in the notice of sale, then the sale shall be held at the time customary for such sales in the county. If the trustee elects to state a specific time for sale in the notice of sale, then the sale shall be held at the time stated in the notice unless the sale is continued as may be otherwise provided by law.

(L. 1992 S.B. 688, A.L. 1994 H.B. 1312)

http://www.moga.mo.gov/statutes/C400-499/4430000410.HTM

Missouri Revised Statutes

Chapter 443
Mortgages, Deeds of Trust and Mortgage Brokers
Section 443.410

August 28, 2007

Foreclosures by trustee's sale--how made--redemption.

443.410. Deeds of trust in the nature of mortgages of lands may, in addition to being forecloseable by suit, be also foreclosed by trustee's sale at the option of the holder of the debt or obligation thereby secured and the mortgaged property sold by the trustee or his successor in the same manner and in all respects as in case of mortgages with power of sale; and all real estate which may be sold under any such power of sale in a mortgage deed of trust hereafter made and which at such sale shall be brought in by the holder of such debt or obligation or by any other person for such holder shall be subject to redemption by the grantor in such mortgage deed of trust or his heirs, devisees, executors, administrators, grantees or assigns at any time within one year from the date of the sale; provided, however, that such person so entitled to redeem shall give written notice at the sale or within ten days before the date advertised for the sale to the person making or who is to make the sale of the purpose to redeem if the sale and purchase are so made; and provided further, the said grantor, his representatives, grantees or assigns to make the redemption shall within the year pay the debt and interest or other obligation secured by such deed of trust and to accrue thereon together with all sums paid out by any holder thereof or purchaser at such sale or holder of the rights of such purchaser for interest and principal and either of any prior encumbrances, and for taxes and assessments and all legal charges and costs of the sale.

(RSMo 1939 § 3450, A.L. 1993 H.B. 105 & 480)

Prior revisions: 1929 § 3063; 1919 § 2222; 1909 § 2829

(1958) Redemption statutes do not constitute the exclusive remedy of a mortgagor; in proper cases equity will enforce the right of redemption independent of and outside the statutes. Fitzpatrick v. Federer (Mo.), 315 S.W.2d 826.

(1959) Where trial court denied petition to redeem from foreclosure and appeal was not heard or decided within year and during such year owner of equity of redemption did not pay or offer to pay the debt secured by the mortgage, the case became moot and the right of redemption was lost. Euclid Terrace Corp. v. Golterman Enterprises, Inc. (A.), 327 S.W.2d 542.

(1962) Where mortgaged premises were damaged by fire prior to foreclosure sale at which mortgagee purchased premises at full amount of the outstanding indebtedness, mortgagor was entitled to the insurance proceeds as the purchase constituted payment and extinguished the debt. Northwestern National Insurance Co. v. Mildenberger (A.), 359 S.W.2d 380.

(1968) Where purchaser of property sold under foreclosed deed of trust purchased property for himself and not for or on behalf of debt holder, mortgagor did not have a cause of action for redemption. Dickey v. Barnes (A.), 427 S.W.2d 732.

(1975) This section held constitutional as against claim that it constitutes state action and thereby violates the due process clause of the fourteenth amendment to the Constitution of the United States. Federal National Mortgage Association v. Howlett (Mo.), 521 S.W.2d 428.