New Hampshire's home loan industry offers a typical selection of home loan products to consumers. These home loans are protected by a unique set of foreclosure processes that typically favor the lender. Furthermore, several of these foreclosure processes are unique to the area. As a result, New Hampshire's foreclosure processes are worth studying closely. Here is some background information about New Hampshire's home values, population trends and mortgage industry that can aid in the study of New Hampshire's foreclosure processes.
New Hampshire's Real Estate Values
New Hampshire's median home values tend to be significantly higher than the 4th quarter 2009 national median price of $179,900.
To illustrate this point, here are the February, 2010 median home values for three of New Hampshire's most populated cities:
- Dover ($207,500)
- Concord ($199,900)
- Manchester ($199,000).
There are two major reasons why this is the case:
First, New Hampshire's high median income makes the state less income-sensitive to home prices. New Hampshire's 2009 median income for a family of 4 was $87,396 - (source). This high median income makes New Hampshire residents less income-sensitive to the price of a home. In fact, it can be reasonably deduced that New Hampshire's income elasticity of demand for housing is one of the lowest in the country. This low income elasticity of demand for housing has a tendency to drive home values higher.
Second, there is always a high demand for quality housing in New Hampshire. This is the case because the state has a well-deserved reputation for having a great quality of life, good schools and enjoyable living conditions (source).
The three most populated cities in New Hampshire, based on the 2006 US Census estimates:
- Manchester (109,497)
- Nashua (87,157)
- Concord (42,378).
These cities have two common population trends that seem to be driving up home prices. Each of these cities has seen double-digit percentage growth in their populations, and all have also seen an influx of people from outside the New England area who are taking advantage of one of the nation's stronger job markets. This strength comes from an increase in investment from the health care and insurance industries. As a result, New Hampshire's home prices have stayed well above the national median home price.
New Hampshire's fastest growing cities:
- Manchester - Manchester has one of the lowest costs of doing business in the New England region. As a result, it has lured firms from the health care and high-tech industries into the area. Furthermore, Manchester's quality of life has brought people from other parts of the region who are tired of suburban living. These attributes have made Manchester the fastest growing city in New England.
- Concord - Concord's growth can be attributed to its close proximity to Boston. Many Boston residents have moved into the region to take advantage of Concord’s better quality of life and better job opportunities.
- Derry - Derry's population growth can be attributed to an influx of Boston area residents who wish to take advantage of a lower than average cost of living and cheaper home prices.
New Hampshire Mortgage Types
New Hampshire's home loan industry features a typical line of home loan products. These home loan products include:
- Fixed rate mortgage loans that mature in 15 or 30 years.
- ARM's that mature mainly in one year or five years.
- Second mortgages.
- Refinance mortgage products
- Reverse mortgages.
- Plus a typical selection of FHA and VA loans.
These home loans are recognized by New Hampshire law as being mortgage instruments. In addition, many mortgages in New Hampshire feature a "Power of Sale" clause that makes it easier to foreclose on defaulted properties. Finally, New Hampshire also recognizes mortgage instruments as liens on real property. This recognition allows non- judicial foreclosure procedures to happen.
Most mortgages in New Hampshire also have full recourse privileges. Lenders may attempt to recover a deficiency judgment under Chapter XLVIII, Chapter 479 of New Hampshire's Civil Code. They have 30 days from the time that they must record the home's sale to do so. (Source: ibid.)
New Hampshire Foreclosure Laws
New Hampshire recognizes both judicial and non-judicial foreclosure procedures. However, the vast majority of foreclosure procedures that are conducted in New Hampshire are non-judicial foreclosures.
Borrowers may in some instances attempt to redeem their properties. If a home is foreclosed upon using a judicial foreclosure procedure, the borrower may attempt to redeem a property. On the other hand, a borrower may not attempt to redeem a property if any of the three non-judicial foreclosure procedures described below are used.
Here is a brief review of the foreclosure processes that are used in New Hampshire:
The judicial foreclosure process works like this:
- The borrower must first ask the court for the right to foreclose on a property. This process must take place in the same county as where the home resides.
- If the court agrees that the borrower is in default, the court will grant the borrower between 14-60 days to redeem the property. To do this, the court will ask the borrower to pay the delinquent amount plus any costs.
- If the borrower fails to do this, the court will issue a decree to sell the house.
- The terms of the sale are governed by these rules:
During the auction, anyone may bid any amount to start. This means that the lender and the borrower could realistically attempt to purchase the house.
The bidder who bids the most wins the house. As a result, there are no reserve prices set for the homes.
The seller has up to 30 days to attempt to recover a deficiency judgment.
- A notice of sale must be written and recorded at the court of record for the proceedings.
- After this is done, a copy of the notice must be mailed to the borrower at least 25 days before the proposed sale of the house.
- Once this is done, the same notice must be published in a local newspaper at least once a week for three consecutive weeks in a newspaper that is published in the same county where the property resides.
- The first publication of this notice must appear at least 20 days before the proposed sale of the house.
- The notice must describe the time, date and place of the sale.
- It must also describe the amount of the default as well as "warn" the borrower that his property is going to be sold. It must also mention what rights he has to stop the procedure.
- The foreclosure sale must be held at the site of the property, unless there is specific language in the Power of Sale clause that specifies a different location.
New Hampshire's three non-judicial foreclosure procedures:
Non-judicial foreclosures occur in New Hampshire if and only if a Power of Sale clause exists in the language of the mortgage. If such language does exist, a non-judicial foreclosure may occur using one of these three procedures:
- Through a "Power of Sale" procedure.
- If the power of sale clause has specific language that describes how the sale should occur, that language will dictate how the sale happens.
- Otherwise, follow the steps for selling a home as outlined above for judicial foreclosures.
New Hampshire also has three unique methods that can be used to conduct a non-judicial foreclosure:
Entry under process:
A Lender may foreclose on a property by entering the property under process of law and maintaining physical possession of the property for one full year. A New Hampshire lender may also foreclose on a property through a method called "Entry and Publication." Here is how it is done:
- The lender must first peaceably enter onto the property.
- Afterwards, the lender must continuously and peacefully posses the home for one year.
- During this time, the lender must publish a notice in a local paper that is published where the home resides that states:
The notice must be published at least once a week for three consecutive weeks with the first publication appearing at least 6 months before the borrower's redemption rights expire.
- The date the home came into the lender's possession,
- The lender and borrowers name,
- The date of the date of the mortgage
- And an accurate description of the property.
Finally, New Hampshire lenders may also foreclose through a process known as "Possession and Publication."
Here is how that process works:
- The lender must first peaceably obtain possession of the home.
- Afterwards, the lender must publish in a paper in the county where the home resides that
- After a certain day, the property will be held for default on the mortgage and that the borrower's rights to the property will become foreclosed upon.
- This notice must be published for 3 consecutive weeks in a newspaper that is published in the same county as where the home resides.
- It must state the borrower's name, and the lender's name.
- It must also state the date of the mortgage, a fair description of the property
- Finally, it must also state clearly the lender's intention to keep the property physically in his possession for at least one year from the date of the first occupancy in the home.