Family upheavals sealed in mundane act

Held in a basement where the hallway juts to create a small crook, the whole process lasted barely a minute.

An attorney read a legal notice and opened the auction of the home, one near 160th Street and Capitol Avenue where the owners were months behind on payments. She told a half-dozen casually dressed men — real estate investors looking for a bargain — that the bank holding the mortgage was putting in an initial bid of $185,000.

“Do I have any other bids?’’ she asked as other courthouse visitors strolled through the scene, oblivious to it all. “Once …twice … three times … sold to the beneficiary.’’

And with those words, another Omaha home was lost to foreclosure.

Though the impact of foreclosure on families is profound, the process is surprisingly informal.

Aside from receiving documents filed by the lender, there is no government involvement. The entire process usually takes place completely outside the court system. And no agency of local, state or federal government regularly tracks outcomes.

Nearly all home loans today are deeds of trust, an agreement between a lender and a borrower that uses a third-party trustee, usually a title insurance company. The trustee holds the deed to the property until the loan is paid off.

And when a deed of trust is in default, the law in Nebraska and most states provides for a foreclosure process that requires no court review.

The process starts when an attorney appointed by the lender as a substitute trustee files a notice of default with the county register of deeds — the only part of the process involving a government agency.

At the time of the filing, the defaulting borrower is in most cases at least 90 days behind on payments, but it can happen after a single missed payment.

With the filing, the borrower is given 30 days to cure the default or make arrangements with the lender. The process that follows varies depending on the lender.

But 30 days after filing the default, the lender can ask the trustee attorney to schedule an auction. The only requirement is to first publish a legal notice for five weeks.

State law requires that auctions be held at the county courthouse, though it’s not a court proceeding at all.

For years in Douglas County, foreclosure auctions were held in a basement hallway. Recently, because of construction, auctions were moved to a meeting room in the City-County Building next door. In Sarpy County, they’re held in a hall just inside the courthouse doors.

Prior to the auction, the lender gives the attorney an initial bid, sometimes discounting the property as much as 20 percent. Most attract no bids and become the lender’s property.

Even if no bidders come, the trustee attorney stands and reads the legal notices.

“People look at you like you’re nuts,’’ said Omaha attorney Eric Lindquist.

The defaulting homeowner almost never attends, and usually has vacated the property.

If the occupant refuses to leave, only then does the matter go to court. The lender can go to county court to seek an eviction order.

Contact the writer:

444-1130, henry.cordes@owh.com

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