In Montana both judicial or in court and non judicial or out of court foreclosure processes are used. As in all states where both forms of foreclosure can be used the determining factor as to which method will be used is whether or not the deed of trust or mortgage contains a power of sale clause. The power of sale clause allows the bank to proceed with the foreclosure sale without the permission of the court. This obviously saves the bank time and money. It is in their best interest to spend less and get is done quicker. So, in every situation where they can proceed with an out of court foreclosure, they will. Most deeds of trust and mortgages do contain a power of sale clause, and therefore most foreclosures are pursued non judicially.

In the event that there is no power of sale clause, in court or judicial foreclosure must be used. In this type of foreclosure, the bank must file a complaint or lawsuit with the court against the homeowner who is having difficulty keeping current on his or her house payment.

After the bank has filed this lawsuit, the court will issue the official declaration that the homeowner is in default. The court will also tabulate the amount that the homeowner is required to pay. The court will also give the homeowner a short amount of time to pay this amount of money. If during this time period the homeowner is unable to pay this money the court will issue a notice of sale.

From this point on, the two foreclosure processes are carried out the same way.

Sometimes a power of sale clause is so detailed that it will stipulate the time, place and terms of the trustee’s sale or auction of the house in question. When this is the case, these instructions must be followed. However, most power of sale clauses aren’t so specific.

The next step at this point, is that the “notice of sale”, must be recorded in the county where the home is located. This notice must also be sent either by certified or registered mail, to the home owner at their last known address. This letter must be mailed no closer to the scheduled sale date than one hundred and twenty days. This notice of sale must also be advertised once a week for three consecutive weeks in a local newspaper that has circulation in the county where the home is located. And, finally this notice of sale must be physically posted on the residence itself a minimum of twenty days prior to the scheduled date.

The bank’s lawyer also referred to as a trustee, will conduct the auction. The auction will be held between the hours of 9:00 am and 4:00 pm on the date referenced in the notice of sale. This sale will be held at the county court house of the county in which the home is located. Ownership of the home will be awarded to whomever the person is, placing the highest bid at the sale. A postponement of the sale of a maximum of fifteen days can be arranged by the bank. A new notice of sale stating the new time and date of the postponed sale, must be posted on the court house door. This notice must be given at the sale time the original sale was to take place.

In Montana, the former homeowner who loses his home at this type of sale is not granted any right of redemption. This means that they are not given any time frame during which to regain ownership of the home.

Also, the bank is not given the option to seek a deficiency judgment if they are not happy with the amount of money generated by the sale of the home. In states where deficiency judgments are allowed a bank can seek additional money from the former homeowner for the difference between what the house sold for and what was owed on the loan. This is not allowed in Montana.