If you’re having trouble making your mortgage payments and worried you might go through a foreclosure in South Carolina, you should learn about the process and your rights. Federal and state laws, in theory, establish a structured, predictable foreclosure process. But lenders sometimes make mistakes and violate the law when processing foreclosures. If the lender messes up, you might have a defense to the foreclosure.
Read on to learn more about each step in a South Carolina foreclosure—from missing your first payment up until you have to move out of the home—and get useful information about federal and state laws that are designed to protect you during the process.
Federal laws give various protections to homeowners both before and during the foreclosure process, including:
(To learn more about federal laws that protect homeowners in the foreclosure process, see Federal Laws Protecting Homeowners: Foreclosure Protections.)
Foreclosures in South Carolina are judicial, which means a court handles the process. The lender must file a lawsuit to foreclose the home. (In some other states, foreclosures are nonjudicial, which means they’re usually carried out with little, if any, court involvement. Learn about the difference between judicial and nonjudicial foreclosures.)
Here’s what homeowners can expect if they stop making their mortgage payments in South Carolina.
South Carolina doesn’t have a law requiring the lender to send a notice to the homeowner before filing a foreclosure lawsuit. But most mortgages contain language requiring the lender to send the homeowner a letter (typically called a “breach letter”) and sometimes other notices before starting a foreclosure. Check your loan documents to find out what notices you're entitled to receive.
At least 120 days after the delinquency date (in accordance with federal foreclosure laws), and after any notice periods the mortgage requires, the lender begins the lawsuit by filing the initial pleading, called a “Complaint,” with the court.
After the lender files the Complaint, it must be served on the homeowner, along with a summons. The summons tells the homeowner about the suit, where the case is filed, how to contact the lender’s attorney, and that the homeowner’s response (called an “Answer”) must be filed within 30 days after the Complaint and summons are served.
To ensure homeowners get the opportunity to discuss and negotiate potential alternatives to foreclosure, the South Carolina Supreme Court issued an Administrative Order requiring lenders to serve homeowners with notice of the right to foreclosure intervention. The homeowner has 30 days from service of the notice to request foreclosure intervention otherwise the case may proceed.
Foreclosure intervention provides a good opportunity to discuss a possible loan modification and other potential workouts to avoid foreclosure, so homeowners should take advantage of this opportunity. (To learn more, see Nolo's article on South Carolina Foreclosure Intervention.)
If the homeowner files an Answer, a foreclosure hearing will be held to determine the validity of the foreclosure. If the court determines that the foreclosure is proper, it will enter a judgment against the homeowner. The homeowner has 30 days from the entry of judgment to appeal. If the homeowner doesn’t file an Answer, the lender will likely get a default judgment, which means the lender automatically wins the case.
Before the sale, the homeowner may pay off the entire debt and stop the sale from happening (called the right of “redemption”). (Learn about the right of redemption before foreclosure.)
After judgment, a public auction of the home is scheduled. Notice of the sale must be posted in three public places in the county, including the courthouse, and published in a local newspaper once a week for three consecutive weeks prior to the sale. The auction will be conducted by a master-in-equity, referee, or sheriff, depending on the county, and will usually be held at the courthouse in the county where the property is located.
The proceeds of the sale are applied to the homeowner’s mortgage debt. If the proceeds exceed the total amount owed, the homeowner is entitled to the excess, assuming there aren't other liens on the property. But if the proceeds fail to completely satisfy the amount owed, the lender may seek a deficiency judgment against the homeowner.
If the lender reserves the right to seek a deficiency judgment, bidding on the property must remain open for an additional 30 days after the foreclosure sale. So, many lenders waive their right to a deficiency judgment to avoid this prolonged bidding period. (Learn more about deficiency judgments after foreclosure in South Carolina.)
Once the sale is final, either immediately after sale, or after 30 days if a deficiency judgment is sought, the homeowner must vacate the property or face eviction.
If you’re facing a foreclosure in South Carolina, having a general understanding of the laws and process can provide you some level of comfort. If you want to read South Carolina’s foreclosure laws for yourself, go to Title 29, Chapter 3, Article 7; Title 15, Chapter 39, Article 5; and Title 15, Chapter 29 of the South Carolina Code of Laws, which provide many of the procedural requirements for foreclosures.
Keep in mind that statutes change, so checking them is always a good idea. How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consider consulting a lawyer if you’re facing a foreclosure.
If you need help understanding the law, want to file an Answer to the foreclosure suit, or have questions about your particular circumstances, consider contacting a local foreclosure attorney. Homeowners facing foreclosure are also encouraged to contact a HUD-approved housing counselor.