My husband and I own a house near Missoula, Montana. We relocated here about five years ago for my husband’s job, but he was laid off six months ago and we fell behind in our mortgage payments. I think we signed a “trust indenture” when we took out the loan. What is this? The house is now being foreclosed. The house is small, but it sits on a few acres and we really like living here. Is there a way for us to get the place back if we lose it to foreclosure?
If your foreclosure is like most foreclosures in Montana (nonjudicial under the state's Small Tract Financing Act), you won’t get a chance to redeem the home after the foreclosure sale. (This is explained in more detail below.)
Foreclosures Under the STFA
Montana’s Small Tract Financing Act (STFA) provides that a trust indenture (basically a deed of trust) may be foreclosed nonjudicially (which means the foreclosure takes place without court supervision) (Mont. Code Ann. § 71-1-304). There is no right of redemption following a nonjudicial foreclosure sale under the STFA (Mont. Code Ann. § 71-1-228, § 71-1-318(3)). (There is also no right of redemption after a judicial sale of a trust indenture, if the lender is not entitled to a deficiency judgment. See First State Bank of Forsyth v. Chunkapura, 226 Mont. 54, 734 P.2d 1203 (1987)).
Most foreclosures in Montana are nonjudicial foreclosures under the STFA.
General Right to Redeem After a Foreclosure in Montana
In other circumstances (say the foreclosure is a judicial foreclosure of a mortgage), then the former homeowners get one year within which they may redeem the home (Mont. Code Ann. § 25-13-802). In order to redeem, the homeowner would have to pay the purchaser the full price paid at the sale plus interest and all other allowable amounts the purchaser paid after the sale, such as amounts for repairs and taxes (Mont. Code Ann. § 25-13-802).
If the homeowner doesn't redeem the house within the one-year time frame (called the redemption period), the right of redemption expires. After that, the homeowner won’t have another opportunity to get the house back. (Learn more general information about the right of redemption.)
Save Your Home By Completing a Workout with Your Lender Before the Sale
Even if you do get the right to redeem the home after the foreclosure, in most cases, it is better to take action before the sale if you want to keep your home. This will give you more options to save the property. For example, you could:
- pay off the past-due amounts to reinstate (catch up on) the loan, or
- negotiate an alternative to foreclosure that will allow you to keep the property, such as a mortgage modification, forbearance agreement, or repayment plan.
Foreclosures in Montana typically take just a few months to complete so you’ll need to act quickly to explore alternatives to foreclosure before the sale. (To learn more about foreclosure laws and procedures in Montana, visit Nolo’s Montana Foreclosure Law Center.)
How to Locate Montana’s Redemption Laws
To find the statutes that discuss your right to redeem the home in Montana, go to Title 71, Chapter 1, Part 2 and Part 3 of the Montana Code. Also, see Title 25, Chapter 13, Part 8.