12 U.S.C. § 3759: Presale reinstatement

Summary

The foreclosure commissioner (the official running the sale) must stop a foreclosure and cancel the sale only in a few cases, except as limited by sections 3756(b) and 3760(c). The sale must be stopped if the Secretary orders it before or at the sale; if the borrower shows at least 3 days before the sale that the default did not exist when the notice was served; or if, before the public auction ends, the borrower pays the full principal and interest that would have been due without acceleration for a money default, or cures a nonmoney default, and also pays all amounts due under the mortgage (not including extra sums from acceleration), secured expenses, and foreclosure costs allowed under section 3761. The Secretary can refuse cancellation if the borrower has previously caused a foreclosure to be canceled by curing a default. Before withdrawing a property under the borrower’s challenge or payment, the foreclosure commissioner must give the Secretary a reasonable chance to object. If a foreclosure is canceled, the mortgage stays in effect as if it was never accelerated, cancellation does not stop a later foreclosure, and the commissioner must file a notice of cancellation where the notice of default and sale is filed under section 3758.

Title 12, §3759

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(a)Withdrawal and cancellation

(1)In general

Except as provided in section 3756(b) and 3760(c) of this title, the foreclosure commissioner shall withdraw the security property from foreclosure and cancel the foreclosure sale only if—

(A)the Secretary directs the foreclosure commissioner to do so before or at the time of the sale;

(B)the foreclosure commissioner finds, upon application of the mortgagor not less than 3 days before the date of the sale, that the default or defaults upon which the foreclosure is based did not exist at the time of service of the notice of default and foreclosure sale; or

(C)(i)in the case of a foreclosure involving a monetary default, there is tendered to the foreclosure commissioner before public auction is completed the entire amount of principal and interest which would be due if payments under the mortgage had not been accelerated;

(ii)in the case of a foreclosure involving a nonmonetary default, the foreclosure commissioner, upon application of the mortgagor before the date of foreclosure sale, finds that such default is cured; and

(iii)there is tendered to the foreclosure commissioner before public auction is completed—

(I)all amounts due under the mortgage agreement (excluding additional amounts which would have been due if mortgage payments had been accelerated);

(II)all amounts of expenditures secured by the mortgage; and

(III)all costs of foreclosure incurred for which payment from the proceeds of foreclosure is provided in section 3761 of this title.

(2)Discretionary noncancellation

The Secretary may refuse to cancel a foreclosure sale pursuant to paragraph (1)(C) if the current mortgagor or owner of record has, on one or more previous occasions, caused a foreclosure of the mortgage, commenced pursuant to this chapter or otherwise, to be canceled by curing a default.

(b)Opportunity of Secretary to dispute withdrawal

Before withdrawing the security property from foreclosure under subparagraph (B) or (C) of subsection (a)(1), the foreclosure commissioner shall afford the Secretary a reasonable opportunity to demonstrate why the security property should not be so withdrawn.

(c)Effect of cancellation

(1)Mortgage unaffected

In any case in which a foreclosure commenced under this chapter is canceled, the mortgage shall continue in effect as though acceleration had not occurred.

(2)Commencement of new foreclosure sale

Cancellation of a foreclosure sale under this chapter shall have no effect on the commencement of a subsequent foreclosure proceeding under this chapter.

(d)Notice of cancellation

The foreclosure commissioner shall file a notice of cancellation in the same place and manner provided for filing the notice of default and foreclosure sale in section 3758 of this title.

Editorial Notes

Codification Section is based on section 810 of title VIII of S. 2281, One Hundred Third Congress, as reported July 13, 1994, which was enacted into law by Pub. L. 103–327.

§3759 Presale Reinstatement

Summary

Title 12, §3759

Notes & Related Subsidiaries

Editorial Notes

Citations & Metadata