Given the housing market crisis, foreclosures nationwide are on the rise. In Missouri — because the dominant debt instrument used to purchase a home are Deeds of Trust — foreclosure of a deed of trust can commence only in the event of default in the performance required by the terms of the deed of trust. Almost always this will take the form of the mortgagor failing to make payments required by the terms of the transaction. Foreclosure cannot being until there is an actual default.
Some creditors/mortgagees will request foreclosure soon after a default. However, for fear of being liable for wrongful foreclosure, attorneys for the creditors will require a thorough review of the deed of trust and send detailed notices (in compliance with the Fair Debt Collection Practices Act and Constitutional safeguard of Due Process) to the debtor before taking any action. Extreme caution needs to be exercised given the fact that foreclosure in violation of Missouri statutes can resul tin a misdemeanor.
In addition to these notice, contractual, constitutional, and statutory requirements, other common impediments in a creditor effectuating foreclosure the death of the debtor or declaration of bankruptcy by the debtor. Bankruptcy is in its own specialized area of law, and is thus beyond the scope of my purview — but the filing of a petition in bankruptcy results in an automatic stay (i.e., stop) of any foreclosure proceedings.
Further, in keeping with our sense of fairness and common sense, RSMo 443.300 also issues a stay in cases when the debtor dies:
If any person shall die owning real estate on which there is an outstanding deed of trust or mortgage of real estate, or having subjected personal property to a security interest with power of sale, shall die, no sale shall take place under the deed of trust or mortgage conveying real estate within six months after the death of such person, and no sale shall take place of personal property so subjected to a security interest within four months after the death of the person.