Nebraska Updates Foreclosure Provisions
By Marlana Melendez, J.D.
Through Legislative Bill 151, the Nebraska State Legislature recently amended several provisions regarding foreclosures and trust deed defaults relating to the sale of trust property. These provisions take effect on September 5, 2015.
Filing a Foreclosure Complaint
Upon filing a complaint for the foreclosure or satisfaction of a mortgage, the plaintiff must state whether any other proceedings have been previously filed and whether such debt has been collected and paid.
This requirement allows broader protection for the debtor. However, this does not apply to any purchaser of land who did not assume the mortgage indebtedness.
Designating a Representative
Under the new amendment, a plaintiff must designate a representative to receive notices of ordinance violations. Subsequent to filing a complaint, the plaintiff must provide the name and address of a representative he or she designates to accept notices of ordinance violations by the owner of the mortgaged property on behalf of the plaintiff. The plaintiff has five business days to provide such name and address.
This designation of such representative to receive notices must terminate upon transfer of fee title ownership to the mortgaged property. However, failure to provide such name and address does not invalidate, void, or affect the complaint in any way.
The Sale of Trust Property
Notice of Default
In addition to requiring the filing of a foreclosure complaint, the new amendment lists several requirements for filing a notice of default in cases of mortgaged property or trust deed default. In a case of a trust deed default, the trustee must file a notice of default within the county where the trust property is located setting forth the following:
• Name of the trustor;
• Reference to where the name has been previously recorded;
• Description of the trust property;
• A statement that a breach of obligation has occurred;
• A statement describing the nature of such breach; and
• Whether the sale of the trust property will satisfy such breach.
If the trust property is used in farming operations, the notice of default must additionally set forth:
• A statement that the default can be cured within two months of the filing date;
• The amount of the entire unpaid principal sum secured by the trust deed;
• The amount of interest accrued since default up to and include the date the notice of default is signed by the trustee;
• The amount of per diem interest accruing from and after such date; and
• The amount of the unpaid principle which would not be due had no default occurred.
Additionally, after the lapse of more than one month, the trustee may give notice of the sale. This notice must meet the foregoing requirements. Where the trust property is used in farming operations, notice of sale may be given after the lapse of more than two months.
The new amendment further states that a trustee must provide the name and address of the person designated by the beneficiary of the trust deed to accept notices of ordinance violations by the owner of the trust property on behalf of the beneficiary. This occurs subsequent to filing a notice of default and the trustee has five business days to provide such name and address.
However, failure to provide the name and address of the designated person does not invalidate, void, or affect the notice of default in any way and shall terminate upon transfer of fee title ownership to the trust property.
Costs and Expenses Incurred by Breach or Default
Acceleration
In cases where all or a portion of the principal sum of the obligation, secured by the trust deed, is paid prior to the maturity date, resulting in a breach or default, the trustor may pay the beneficiary the entire amount due under the terms of the trust deed within one month. If the amount due is related to the sale of property, the trustor may pay the beneficiary at any time within two months. Once payment is made to the beneficiary, the default is dismissed and discontinued, leaving the trust deed to remain in force and effect, the same as if no acceleration had occurred.
The trustor may pay the beneficiary, not only the entire amount due under the terms of the trust deed, but any costs or expenses incurred in enforcing the terms of such obligation or trust deed. This includes the trustee’s fees actually incurred; however, the fees must not exceed in the aggregate fifty dollars or one-half of one percent of the entire unpaid principle sum, whichever is greater.
Cancellation
If the default is cured and the trust deed is reinstated in the manner provided above, the beneficiary, upon demand of any person with an interest in the trust property, must request to the trustee that the trustee execute, acknowledge, and deliver a cancellation of the recorded notice of default. The beneficiary must make this request to the trustee within thirty days. However, if the beneficiary, for any reason, refuses to make such request, he or she will become liable to the person entitled to a cancellation of the recorded notice of default for all damages resulting from the refusal.
Cancellation of the recorded notice, executed by the trustee, must be in the following format:
The undersigned hereby cancels the notice of default filed for record ……., 20…., and recorded in book ………, page ……, (or computer system reference ……….) Records of ………… County, Nebraska, which notice of default refers to the trust deed executed by ………… as trustor, in which ………… is named as beneficiary and ……….. as trustee, and filed for record …………, 20…., and recorded in book ………., page ……, (or computer system reference ……….) Records of ………… County, Nebraska.
Signature of trustee or attorney for trustee …………………………………………..
Additionally, when all or any portion of the principal sum of any obligation secured by the trust deed is paid prior to the maturity date, resulting in a breach or default under the terms of such trust deed, the beneficiary is entitled to collect any costs and expenses associated with such breach. This includes any costs incurred in enforcing the terms of the trust deed, including trustee’s fees, costs, and expenses. However, this must not exceed the amount provided in the trust deed or the obligation secured thereby.
The remaining sections of the foregoing statute have been repealed.
Marlana Melendez, J.D. is Regulatory Compliance Consultant at Bankers Advisory. She is a graduate of University of South Florida and earned her Juris Doctor at the New York School of Law. Marlena is admitted to the Bar in Massachusetts and New York. She can be reached at Marlena@bankersadvisory.com
Anna DeSimone founded Bankers Advisory in 1986 and is a nationally recognized authority in residential mortgage lending. She has received numerous industry awards and has authored more than 40 best practices guides and hundreds of articles.
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