New Hampshire Foreclosure Laws and Procedures

Before the foreclosure crisis, federal and state laws regulating mortgage servicers and foreclosure procedures were relatively limited and tended to favor foreclosing lenders. Now, however, many federal and state laws give protections to borrowers. Servicers generally must provide borrowers with loss mitigation opportunities, account for each foreclosure step, and carefully comply with foreclosure laws.

Also, most people who take out a loan to buy a residential property in New Hampshire sign a promissory note and a mortgage. These documents give homeowners contractual rights after a mortgage default.

So, don't get caught off guard if you're about to go through a foreclosure. Learn all about the foreclosure process in New Hampshire, from missing your first payment to a foreclosure sale.

What Are My Rights During Foreclosure in New Hampshire?

In a New Hampshire foreclosure, you'll most likely get the right to:

• a preforeclosure breach letter
• apply for loss mitigation
• get notice of the foreclosure sale
• receive special protections if you're in the military
• pay off the loan to prevent a sale
• file for bankruptcy, and
• get any excess money after a foreclosure sale.

Once you understand the New Hampshire foreclosure process and your rights, you can make the most of your situation and, hopefully, work out a way to save your home or at least get through the process with as little anxiety as possible.

What Is Preforeclosure?

The period after you fall behind in payments, but before a foreclosure officially starts, is generally called the "preforeclosure" stage. Sometimes, people refer to the period before a foreclosure sale happens as "preforeclosure," too.

During this time, the servicer can charge you various fees, including late and inspection fees, and, in most cases, must let you know how to avoid foreclosure, and send you a breach letter (a preforeclosure notice).

When Can a Foreclosure in New Hampshire Start?

Under federal law, the servicer usually can't officially begin a foreclosure until you're more than 120 days delinquent on payments, subject to a few exceptions. (12 C.F.R. § 1024.41).

Which Type of Foreclosure Is Permitted in New Hampshire?

If you default on your mortgage payments in New Hampshire, the lender may foreclose using a judicial or nonjudicial method.

How Judicial Foreclosures Work

A judicial foreclosure begins when the lender files a lawsuit asking a court for an order allowing a foreclosure sale. The lender will automatically win the case if you don't respond with a written answer.

But if you choose to defend the foreclosure lawsuit, the court will review the evidence and determine the winner. If the lender wins, the judge will enter a judgment and order your home to be sold.

How Nonjudicial Foreclosures Work

If the lender chooses a nonjudicial foreclosure, it must complete the out-of-court procedures described in the state statutes. After completing the required steps, the lender can sell the home at a foreclosure sale.

Most lenders opt for the nonjudicial process because it's quicker and cheaper than a judicial foreclosure.

What Are the Steps Involved in the Nonjudicial Foreclosure Process in New Hampshire?

Again, most residential foreclosures in New Hampshire are nonjudicial. Under New Hampshire law, the borrower typically receives just one warning about the foreclosure sale: a notice of sale.

The lender has to personally serve the notice of sale to the borrower or mail it at least 45 days before the sale and publish it in a newspaper once a week for three weeks before the sale. (N.H. Rev. Stat. § 479:25).

How Do Foreclosure Sales Work in New Hampshire?

At the sale, the lender usually makes a credit bid. The lender can bid up to the total amount owed, including fees and costs, or it may bid less. In some states, including New Hampshire, when the lender is the high bidder at the sale but bids less than the total debt, it can get a deficiency judgment against the borrower (see below).

If the lender is the highest bidder, the property becomes REO. But if a bidder, say a third party, is the highest bidder and offers more than you owe, and the sale results in excess proceeds (more than what's needed to pay off all liens), you're entitled to that surplus money.

What Are the Options Available for Borrowers During Foreclosure in New Hampshire?

A few potential ways to stop a foreclosure and keep your home include reinstating the loan, redeeming the property before the sale, or filing for bankruptcy. Working out a loss mitigation option, like a loan modification, will also stop a foreclosure.

Or you might be able to work out a short sale or deed in lieu of foreclosure and avoid foreclosure. (But you'll have to give up your home with a short sale or deed in lieu of foreclosure transaction.)

Reinstating the Loan

While New Hampshire law doesn't give the borrower the right to reinstate before the sale, your mortgage contract might provide you with this right. Check your loan documents to find out if you get a reinstatement right. Or the lender might agree to let you complete a reinstatement.

Does New Hampshire Have a Redemption Period After Foreclosure?

Some states provide foreclosed borrowers with a redemption period after the foreclosure sale, during which they can buy back the home. New Hampshire law doesn't give the borrower the right to redeem after a nonjudicial foreclosure.

You can, however, redeem the home before the sale by paying off the full amount of the loan (not just the overdue amounts), which will stop the foreclosure. (N.H. Rev. Stat. § 479:18).

Filing for Bankruptcy to Stop a Foreclosure

If you're facing a foreclosure, filing for bankruptcy might help. After filing for bankruptcy, an "automatic stay" goes into effect, functioning as an injunction prohibiting the lender from foreclosing on your home or trying to collect its debt, at least temporarily.

In many cases, filing for Chapter 7 bankruptcy can delay the foreclosure by a matter of months. Or, if you want to save your home, filing for Chapter 13 bankruptcy might be the answer. To find out the options available, speak with a local bankruptcy attorney.

Foreclosure Protections and Military Servicemembers

The Servicemembers Civil Relief Act (SCRA), a federal law, provides legal protections to military personnel facing foreclosure.

New Hampshire state law extends federal SCRA protections to members of the state guard or national guard or as a member of the militia called to active duty by the governor for a period of 30 days or more. (N.H. Rev. Stat. § 110-C:2).

Are Deficiency Judgments Allowed in New Hampshire?

The borrower's total mortgage debt sometimes exceeds the foreclosure sale price in a foreclosure. The difference between the total debt and the sale price is called a "deficiency."

For example, say the total debt owed is $600,000, but the home sells for $550,000 at the foreclosure sale. The deficiency is $50,000. In some states, the lender can seek a personal judgment against the debtor to recover the deficiency. Generally, once the lender gets a deficiency judgment, the lender may collect this amount from the borrower.

New Hampshire law permits deficiency judgments after nonjudicial foreclosures.

New Hampshire Deficiency Judgment Laws

The foreclosing party must file a lawsuit following the sale to get a deficiency judgment after a nonjudicial foreclosure in New Hampshire. It must demonstrate that the foreclosure sale price was fair and reasonable, which depends on the circumstances of each case and is not necessarily based on the property's fair market value. (N.H. Rev. Stat. § 508:6).

Get More Foreclosure Information

For more information on federal mortgage servicing laws and foreclosure relief options, go to the Consumer Financial Protection Bureau (CFPB) website.

Getting Help With Foreclosure and Loss Mitigation in New Hampshire

If you have questions about New Hampshire's foreclosure process or want to learn about potential defenses to a foreclosure and possibly fight the foreclosure in court, consider talking to a foreclosure attorney. Talking to a HUD-approved housing counselor about different loss mitigation options is also a good idea.