Homeownership in Alaska could be used to define the average for home sales across the country and is currently measured at just below 64%. Trend lines in the state follow along perfectly with national changes in home sales and have for the last 20 years. Home buyers in The Last Frontier sometimes look for alternatives to a big bank home loan. One form of special financing that's working for many Alaska buyers is called a hard money loan. These are offered up by small investment firms and often fund much faster than a traditional mortgage. The main difference is that a buyer must put their home or another owned piece of real estate as collateral to secure the loan. In addition to funding faster than most big bank loans, hard money loans also typically require much less paperwork.
Alaska Foreclosure Laws
There are generally two types of foreclosures in Alaska, judicial and non-judicial. If a lender files suit in a court of law and allows the state court system to manage the process, then it is a judicial foreclosure. If the lender decides to keep the process out of the court system, then it is called a non-judicial foreclosure. In Alaska, the vast majority of home foreclosures are non-judicial, but with a special caveat that most other states do not have. In Alaska, non-judicial foreclosures must be managed by a state-approved third-party trustee. In general, non-judicial foreclosures can move much faster than those that go through a court system. Homeowners facing foreclosure should make sure they are well informed and know what to expect.
Property Redemption after Foreclosure Sale
In some states, a homeowner can redeem or repurchase the property within a certain period of time, even after the foreclosure sale has taken place. This is called a right of redemption. However, in Alaska, homeowners cannot redeem their property after a non-judicial foreclosure unless the deed of trust that was signed when the loan was first initiated specifically provides a right of redemption, which is rare.
Deficiency Judgments in Alaska
In most states, when a home is sold in foreclosure, if it does not bring in enough money to cover the debt owed by the homeowner, then the lender can continue to pursue payment from the borrower by seeking a deficiency judgment against them. Good news for Alaska homeowners, deficiency judgments are not allowed following non-judicial foreclosures in the state.
Deed in Lieu of Foreclosure
A deed in lieu of foreclosure is an option for many homeowners facing foreclosure. The pressure and stress of fighting that battle can be very difficult. In many cases, the borrower can and will opt to just walk away. Most lenders will allow the borrower to do so, as long as possession of the property is turned over without issues. A lot of the time, the lender will even offer to provide some money to help offset the costs associated with moving unexpectedly. This kind of agreement doesn't save the home but it can eliminate a lot of stress on both sides.
Grace Period Notice
Some states have the built-in promise of a special grace period for people facing foreclosure, a time set aside once the lender decides to pursue the process, that is intended to give the borrower a chance to catch up on back payments or to negotiate a settlement or arrangement with the lender. That is not the case in Alaska, but there are set timeframes in place for notices to the homeowner that can provide the same kind of time to make necessary arrangements. A lender's notice of default must be on record not less than 30 days after default and not less than 90 days before sale. The notice of default must be sent by certified mail to the borrower within 10 days after recording or personally delivered to the borrower within 20 days after recording. Before the sale, the foreclosing party must publicly post and publish a notice of sale (in a newspaper and on the Internet).
Service Members Mortgage Protections
The federal Servicemembers Civil Relief Act offers protections to federal military personnel who face foreclosure, giving some delay in process to help them make arrangements. These same protections are extended by the state of Alaska, to members of the Alaska National Guard and Alaska Naval Militia while on active duty for the state by order of the Governor.
High Risk Mortgage Protections
Many states have special protections in place for borrowers with high risk mortgages, those with very high interest rates or that require a big balloon payment. In Alaska, all homeowners have the same protections. There are no additional protections for those with high risk loans in Alaska.
Additional State Laws
The maximum interest rate allowed by law is 10.5%. When there is no contract, Alaska limits interest rates to 10.5 percent (or 5 percent more than legal rate for an express contract agreement). Any contract with a principal amount greater than $25,000 is exempt from these limits.
Alaska is a homestead state. Unlike most states, Alaska does not impose an acreage limit for homestead exemptions. The state allows homestead exemptions of up to $72,900, but does not allow married couples to double that amount. Alaska's homestead exemption applies to one's primary residence (not a vacation home or second property). There are no extra steps that need to be taken in order to claim this exemption, since it is applied automatically during a bankruptcy proceeding.
While Alaska law generally limits debtors to the state exemption, federal courts have ruled that Alaskans may use the federal exemption instead if they choose.
Lender Licensing Requirements
A Mortgage Broker/Lender License is required of any mortgage broker, who is a company or sole proprietorship, who for compensation or gain, or in the expectation of compensation or gain, directly or indirectly arranges with a variety of lending sources to provide financing for mortgage loans or assists or offers to assist a borrower or potential borrower to obtain financing for mortgage loans on Alaska residential property. This License is required of any mortgage lender who is a company or sole proprietor, who consummates and funds a mortgage loan and who is named as the payee in the promissory note and as the beneficiary of the deed of trust on Alaska residential properties.