Don’t get caught off guard if you’re facing a foreclosure in South Dakota. Read on to find out about South Dakota foreclosures and learn about your rights under federal and state law during the process. (To learn what to do—and what not do—in 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.)
For instance, if a borrower falls behind in payments, federal mortgage servicing laws require the servicer to establish—or make good faith efforts to establish—live contact with the borrower no later than 36 days after the delinquency, and again within 36 days after each subsequent delinquency. The servicer has to tell the borrower about loss mitigation options, like a loan modification, short sale, or any other alternatives to foreclosure that might be available. (12 C.F.R. § 1024.39). (This early intervention requirement is just one of many federal laws that protect borrowers who’re behind in their mortgage payments. To learn about other protections, see Federal Laws Protecting Homeowners: Foreclosure Protections.)
Foreclosures in South Dakota can be nonjudicial, which means the foreclosing party (the “lender”) doesn’t have to go through state court. Instead, the lender completes a series of out-of-court steps and sells the property to a new owner at a foreclosure sale.
A nonjudicial foreclosure in South Dakota is pretty straightforward: The lender serves the borrower a notice of sale at least 21 days before the sale date and publishes the notice in a newspaper once a week for four weeks. (S.D. Codified Laws § 21-48-6.1, § 21-48-6). Then the lender can sell the property at a foreclosure sale.
Though, even if the lender starts a nonjudicial foreclosure, you can force it to foreclose judicially (in court) by applying in the appropriate court. (S.D. Codified Laws § 21-48-9). (If you want to convert a nonjudicial foreclosure into a judicial one, you should consult with a South Dakota attorney to make sure you follow the proper procedures.)
Alternatively, the lender might choose to proceed with a judicial foreclosure from the beginning.
South Dakota law generally provides borrowers who go through foreclosure the right to redeem the property after the foreclosure sale and limits the amount of a potential deficiency judgment.
In some states, the borrower can redeem (repurchase) the property within a specific period after the foreclosure. Generally, foreclosed homeowners in South Dakota get one year to redeem the property after a foreclosure sale. (S.D. Codified Laws § 21-52-11).
But if the mortgage is a short-term redemption mortgage, the redemption period is 180 days after the person or entity who bought the property at the foreclosure sale records a certificate of sale in the land records. (S.D. Codified Laws § 21-49-30, § 21-52-11). (To find out if you have a short-term redemption mortgage, check your loan paperwork.)
Also, if the borrower abandons the property, the new owner can ask the court to reduce the redemption period to 60 days. (S.D. Codified Laws § 21-49-13(8), § 21-49-38).
If a borrower’s total mortgage debt is more than the foreclosure sale price, the difference is called a “deficiency.” Some states, including South Dakota, allow the lender to seek a personal judgment—called a “deficiency judgment”—against the borrower for this amount.
While the lender can get a deficiency judgment after a nonjudicial foreclosure, if the lender buys the home at the foreclosure sale, the amount of the deficiency is limited to the difference between the borrower’s total debt and the home’s fair market value. (S.D. Codified Laws § 21-48-14).
In a judicial foreclosure, the deficiency judgment amount is usually the total amount of the debt minus the foreclosure sale price, but the court will consider the property’s value when setting the amount of the deficiency. (S.D. Codified Laws § 21-47-16).
If you're facing a foreclosure in South Dakota and want to learn more about your rights and whether you have any defenses to the foreclosure, consider talking to a foreclosure attorney. To get information about different loss mitigation options, consider meeting with a HUD-approved housing counselor.