A power of sale foreclosure on a seller-carry note runs through the deed-of-trust trustee on a documented procedural sequence. The steps below walk the framework from the borrower default identification through the trustee’s deed recordation. Every step runs against state-specific timing and procedure that the holder runs against state-specific counsel.

Step 1 — Identify the default against the borrower-level ledger

The holder runs the borrower-level ledger against the payment record on the date the default opens. The default runs on missed payments, missed tax payments, missed insurance payments, or other covenant breach under the deed of trust. The ledger reconciles the unpaid principal balance, the accrued interest, the escrow balance if the note carries an impound, the late fees, and the costs authorized by the deed of trust. A third-party servicer produces the ledger on demand against the firm’s system of record.

Step 2 — Run the §1024.39 early intervention contact

Regulation X at 12 C.F.R. §1024.39 requires the servicer to make good-faith efforts to establish live contact with a delinquent borrower not later than the state-specific early-intervention timing the rule identifies. The contact runs the borrower’s awareness of the default, the available loss-mitigation options, and the path to a §1024.41 loss-mitigation application. A self-serviced holder runs the §1024.39 contact in-house on the residential consumer-purpose note.

Step 3 — Run the §1024.41 loss-mitigation evaluation

The borrower files a loss-mitigation application. The servicer or the self-serviced holder runs the §1024.41 acknowledgment, requests any missing documentation under the §1024.41(b) framework, evaluates the borrower’s application against the available loss-mitigation options, and produces the written determination. The framework restricts the holder from recording the notice of default or running the trustee’s sale on a complete and timely application — the dual-tracking restriction. A third-party servicer runs the §1024.41 cycle as part of the standard scope.

Step 4 — Send the breach letter to the borrower

The deed of trust runs a contractual pre-foreclosure notice — the breach letter — that the holder sends to the borrower at the borrower’s last-known address. The letter runs the default identification, the cure amount, the cure window under the deed of trust, and the acceleration consequence of a failure to cure. The letter runs by certified mail with return receipt. The letter is a procedural prerequisite the trustee runs against the foreclosure file before recording the notice of default.

Step 5 — Refer the foreclosure to the trustee

The holder refers the foreclosure to the trustee — the recorded trustee in the deed of trust or a substituted trustee on a recorded substitution. The referral runs the original note, the recorded deed of trust, the recorded assignment chain, the borrower-level ledger reconciled to the referral date, the breach letter and the proof of service, the §1024.41 file on the loss-mitigation status, and the holder’s instructions on the foreclosure direction. The trustee runs the referral against the trustee’s procedural file on the matter.

Step 6 — Record the notice of default

The trustee records the notice of default at the county recorder against the property identification. The notice runs the loan identification, the default identification, the cure amount, and the trustee’s contact information. The trustee mails the notice to the borrower at the last-known address, to the property address, and to all junior lien holders recorded against the property. The state framework runs the reinstatement window from the recordation date.

Step 7 — Run the reinstatement window

The state-specific reinstatement window runs the borrower’s right to cure the default by paying the arrears, the trustee’s fees, and the holder’s costs authorized by the deed of trust. A reinstatement returns the loan to performing status and dissolves the foreclosure framework. The trustee runs the reinstatement quote on the date of the borrower’s inquiry against the borrower-level ledger. A third-party servicer produces the quote on demand against the firm’s system of record.

Step 8 — Record and publish the notice of sale

After the reinstatement window closes without a cure, the trustee records the notice of sale at the county recorder and publishes the notice in a newspaper of general circulation. The notice runs the sale date, the sale time, the sale location, the minimum bid the trustee accepts, and the property legal description. The state framework runs the publication frequency and the sale-date timing.

Step 9 — Set the credit bid amount

The holder runs the credit bid amount as a strategic decision against the property’s fair market value, the state anti-deficiency framework on the seller-carry note, the holder’s appetite to take back the property, and the holder’s recovery strategy against the borrower on any shortfall. The holder consults state-specific counsel on the bid-setting analysis.

Step 10 — Run the auction and the trustee’s deed

The trustee conducts the public auction at the time and place identified in the notice. The trustee accepts the highest bid, issues the trustee’s deed to the successful bidder, and disburses the sale proceeds — first to the foreclosing lien, then to junior liens in priority order, then any surplus to the borrower. The trustee records the deed at the county recorder against the property identification.

Step 11 — Run the post-sale steps

The successful bidder runs the eviction or unlawful-detainer process against the borrower in possession under state law. The holder who credit-bid the loan balance updates the borrower-level ledger to reflect the extinguishment of the debt against the credit bid. A shortfall on a credit bid runs the holder’s deficiency analysis under the state anti-deficiency framework. A third-party servicer runs the post-sale ledger closure as part of the foreclosure scope.

Related Topics

This article is educational and does not constitute legal advice. Power of sale foreclosure runs against state-specific non-judicial foreclosure statutes that vary by jurisdiction, federal Regulation X under the Real Estate Settlement Procedures Act on residential consumer-purpose notes, and state anti-deficiency frameworks that affect the holder’s recovery on a shortfall. Consult qualified legal counsel on the foreclosure requirements that apply to any specific seller-carry matter.

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