New Mexico Foreclosure Laws
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New Mexico generally operates using the lien theory wherein the property stays as guaranty for the loan in question. The legal paperwork through which the property’s lien is placed is referred to as a mortgage. A non judicial foreclosure method does exist in New Mexico but lenders seldom use it to foreclose on residential properties. According to the Deed of Trust Act of New Mexico, mortgages of a commercial nature which are greater than or equal to $500,000, or mortgages which contain language that benefits households of low income groups, may use a non-judicial method for foreclosure. Explicit consent for a deed of trust is required from the borrower.
Lenders in New Mexico follow a judicial foreclosure procedure which takes place through a court, and the court pronounces the final verdict on the foreclosure. The property then sells as part of a sale that has been publicly notified. A District Court within the county where the property is situated has jurisdiction over foreclosures in that area. A complaint, along with a lis pendens, needs to be filed in the District Court. A lis pendens is a legal document that is used to provide notice to the public about the property under foreclosure.
The legal paperwork is generally referred to as a mortgage or note, and in cases of commercial transactions, it is referred to as a security agreement. The security agreement can be merged with the mortgage document. A mortgage needs to be filed to validate the loan in question and its repayment terms, which find a mention in the note.
It normally takes about 120 to 180 days to pass into effect a non-judicial foreclosure that has not been contested; this depends on the schedule of the court. If the action is contested in the court by the borrower, if the hearings are sought to be postponed or if bankruptcy is filed for by the borrower, the process can be slowed down.
A notice of the foreclosure sale has to be advertised a minimum of four weeks before the sale, and once the final verdict is issued; it generally takes four months for the sale to take place. The sale date must be a minimum of thirty days after the issuance of the notice of sale. The sheriff appraises the property and the property cannot be sold for less than two-thirds of its appraised value.
A statutory right for redemption exists in New Mexico. A period of nine months is given to the borrower post-sale to take care of the unpaid loan, unpaid taxes and the costs plus a 10% interest, so that the property can be reclaimed.
If a foreclosure property sells for lesser than the amount on the loan that is secured by the mortgage, the lender can obtain a deficiency judgment. Non-judicial foreclosures also have a provision for a deficiency judgment. However, sales involving low-income property are exempted from getting deficiency judgments.
When a deficiency judgment is issued, the borrower owes to the lender the difference in the original amount of the loan and what the auction results in the property selling for.
Foreclosures in New Mexico are governed by laws that are part of the New Mexico Statutes Annotated (1978); Chapter 48, Articles 48-7-1 to 48-7-24. Laws governing Deeds of Trust are part of Chapter 48, Articles 48-10-1 to 48-10-21.
