Section 408.555

Title XXVI TRADE AND COMMERCE

Chapter 408

Effective - 28 Aug 2006   

  408.555.  Acceleration, repossession and cancellation restricted — required procedures — borrower's right to cure. — 1.  Except as provided in subsection 2 of this section, after a default consisting only of the borrower's failure to make a required payment, a lender, because of that default, may neither accelerate maturity of the unpaid balance nor take possession of or otherwise enforce a security interest until twenty days after a notice of the borrower's right to cure is given both to the borrower and to all cosigners on the credit transaction nor, with respect to an insurance premium loan, give notice of cancellation until thirteen days after a notice of the borrower's right to cure is given; notice shall not be given prior to default.  Until expiration of the minimum applicable period after the notice is given, the borrower or cosigner may cure all defaults consisting of a failure to make the required payment by tendering the amount of all unpaid sums due at the time of the tender, without acceleration, plus any unpaid delinquency or deferral charges.  Cure restores the borrower to his rights as though the default had not occurred.

  2.  This section does not prohibit a borrower from voluntarily surrendering possession of property which is collateral and the lender from thereafter accelerating maturity of the loan and enforcing the note or loan and his security interest in the property at any time after default.  If the lender has not already given the notice described in subsection 2 or 3 of section 408.554, he shall upon voluntary surrender of the collateral notify the borrower either personally or by mail at the borrower's last known address that he may owe additional money after the money received from the sale of the collateral is deducted from the total amount owed.

  3.  No lender is bound by the provisions of subsection 1 of this section if default by the same borrower in connection with the same credit transaction with the same lender has occurred twice notwithstanding the cure of such defaults or three times in the case of a second mortgage loan except as provided in subsection 4 of this section.

  4.  Default by a borrower on a second mortgage loan may be cured by tendering the current obligation of the borrower at any time prior to the completion of the judicial or extrajudicial proceedings for foreclosure upon such real estate.  For the purposes of this section, "current obligation of the debtor" means the aggregate of all installments scheduled to be due at the time of the tender, late charges otherwise permitted by law, and expenses of foreclosures actually incurred by the lender for initiating a bona fide foreclosure, notwithstanding any contractual provision for the acceleration of installment payments.  A lender may take no steps to enforce a security interest in real property pursuant to a second mortgage loan until thirty days after notice of the borrower's right to cure is given; notice shall not be given prior to default.  Cure restores the borrower's rights under the agreement as though the default had not occurred, except that only three defaults are permitted.  This section shall not affect the debtor's right otherwise to redeem such real property under any other provision of law.

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(L. 1979 S.B. 305, A.L. 1983 S.B. 70, A.L. 1992 S.B. 705, A.L. 2006 S.B. 892)