If you’re a homeowner in North Dakota and you're behind in your mortgage payments, it’s a good idea to learn how foreclosures in the state work. In this article, you’ll get details about each step in a North Dakota foreclosure, as well as learn about both federal and state laws that protect homeowners during the process. (To learn what to do—and what not do—if you’re facing a foreclosure, see Foreclosure Do’s and Don’ts.)
Under federal law, servicers are supposed to work with borrowers who are having trouble making monthly payments in a "loss mitigation" process. (“Loss mitigation” is what the mortgage servicing industry calls the process of working with the borrower to avoid a foreclosure.)
Federal mortgage servicing laws require the servicer to establish—or make good faith efforts to establish—live contact with a delinquent borrower no later than 36 days after the borrower misses a payment, and again within 36 days after each subsequent delinquency, to discuss loss mitigation options that might be available. Potential loss mitigation options might include a loan modification, short sale, or deed in lieu of foreclosure.
Also, no later than 45 days after a missed payment, the servicer must inform the borrower in writing about loss mitigation options that could be available.
Federal law also usually prevents the servicer from initiating a foreclosure until the borrower is more than 120 days delinquent on the loan. (To learn more about the federal law that delays the beginning of a foreclosure for 120 days, see How Soon Can Foreclosure Begin?)
If the borrower submits a complete loss mitigation application to the servicer during the 120-day preforeclosure period, the servicer can’t start the foreclosure until it reviews the application, and:
If the borrower doesn’t submit a complete loss mitigation application before foreclosure starts, he or she can still apply for loss mitigation even after foreclosure begins. So long as the borrower submits the complete loss mitigation application more than 37 days before a foreclosure sale, the servicer can’t move for a foreclosure judgment or order of sale, or conduct a foreclosure sale, until one of the three conditions mentioned above has been satisfied. (To learn more about federal laws that protect homeowners in the foreclosure process, see Federal Laws Protecting Homeowners: Foreclosure Protections.)
Foreclosures in North Dakota are judicial, which means the foreclosing party (the “bank”) has to file a lawsuit in court to start the process. Here’s what homeowners can expect if they default on their mortgage in North Dakota.
In North Dakota, the bank serves—usually through the mail—a notice to the homeowner at least 30 days, but not more than 90 days, before filing a foreclosure lawsuit in court. (N.D. Cent. Code § 32-19-20). The notice gives the borrower 30 days to pay the past-due amounts and avoid a foreclosure. (N.D. Cent. Code § 32-19-21).
In North Dakota, the foreclosure officially starts when the bank files a lawsuit—called a “complaint”—in court. The borrower learns about the suit when served a copy of the complaint and a summons. (N.D. Cent. Code § 32-19-29). If the borrower doesn’t answer the lawsuit, the bank will get a default judgment allowing it to hold a foreclosure sale.
The officer making the sale must publish a notice of sale in a newspaper once a week for three successive weeks, and, in some cases, mail copies to interested parties. (N.D. Cent. Code § 28-23-04, § 32-19-08).
State law provides borrowers in foreclosure the right to reinstate the loan (get current), as well as the right to redeem the property after the foreclosure sale. State law also protects borrowers against deficiency judgments in certain circumstances.
In North Dakota, the borrower has the right to reinstate the loan within 30 days after service of the preforeclosure notice. (N.D. Cent. Code § 32-19-28). Also, many mortgage contracts give the borrower additional time to reinstate.
In some states, the borrower can redeem (repurchase) the property within a specific period after the foreclosure. In North Dakota, the borrower generally gets the right to redeem the property within 60 days after the sale except for property that's abandoned or agricultural. (N.D. Cent. Code § 32-19-18).
Abandoned properties. Abandoned properties are excluded from the law that provides a redemption period and, if the court determines that the real property is abandoned, it may eliminate the redemption period. (N.D. Cent. Code § 32-19-19). Also, if the property is abandoned, actual service of notice before a foreclosure is not required or if service by mail has been attempted three times and the attempted service is returned as refused or unclaimed. (N.D. Cent. Code § 32-19-23).
Agricultural properties. If the property is agricultural, the redemption period is 365 days after the bank files the summons and complaint in the office of the clerk of district court or the time of the first publication of the notice by advertisement, but no earlier than 60 days after the sale. (N.D. Cent. Code § 32-19-18).
North Dakota law prohibits deficiency judgments in foreclosures of residential properties of four or fewer units, one of which the owner occupies as a homestead, on up to 40 contiguous acres. The bank can get a deficiency judgment if the property is agricultural land of more than forty acres; however, the judgment is limited to the difference between the amount of the debt and the fair market value of the land at the time the foreclosure begins. (N.D. Cent. Code § 32-19-03).
If you're facing a foreclosure in North Dakota and want to learn more about the process, including your rights and whether you have any defenses to the foreclosure, consider talking to a foreclosure attorney. To get information about loss mitigation options, speak to a HUD-approved housing counselor.