If you’re a homeowner in Louisiana and are behind in your mortgage payments, it's a good idea to learn about how a foreclosure works and find out your rights. To learn about each step in a Louisiana foreclosure and get information about both federal laws and state laws that protect you during the process, read on. (To get tips on what to do, and what not to do, when facing a foreclosure, see Foreclosure Do's and Don'ts.)
Also, federal law generally requires servicers to work with borrowers who are having trouble making their monthly payments in a loss mitigation process to try to avoid a foreclosure. (12 C.F.R. § 1024.41).
A foreclosure in Louisiana is either an executory proceeding or judicial. An executory proceeding, like a judicial foreclosure, goes through court, but it’s a faster process. While most residential foreclosures in Louisiana go through the executory process, here are the procedures for both kinds of foreclosures.
Again, the vast majority of foreclosures in Louisiana are completed in an executory proceeding. In this type of foreclosure, after the foreclosing party (called the “bank” in this article) files a petition and supporting evidence, the court summarily orders the property seized and sold. What gives the bank the right to conduct this streamlined foreclosure process? You probably consented to this kind of foreclosure when you signed your loan documents.
Most Louisiana mortgages include language that entitles the bank to a “confession of judgment” (a foreclosure judgment) if you don’t make payments on the loan. Basically, in the mortgage contract, you agreed that the bank would automatically win its foreclosure case if you default. A confession of judgment lets the bank avoid a lengthy litigation process. Because you’ve already consented to this process, the bank simply files its foreclosure petition along with certain documentation, like a copy of the mortgage, and a court orders your home seized and sold. (La. Code Civ. Proc. Ann. Arts. 2634, 2638.)
After the court orders the sale by issuing a writ of seizure and sale, the sheriff can seize (take) the property and sell it to a new owner. The sheriff will personally serve you the notice of seizure—which must include the time, date, and place of the sheriff's sale—or leave it with an adult living in the home. The notice of seizure will also include information about ways to obtain housing counseling services. (La. Code Civ. Proc. Ann. Arts. 2721.) The sheriff also publishes notice about the sale at least twice but must wait three days, not including holidays, after serving the notice of seizure before doing so. (La. Code Civ. Proc. Ann. Arts. 2722, 2331.)
To challenge this kind of foreclosure, you’ll have to appeal the foreclosure or apply for an injunction to stop it. If you think you have a defense to the foreclosure, you should talk to a foreclosure lawyer as soon as possible.
The bank starts a judicial foreclosure by filing a civil lawsuit against the borrower who defaulted on the mortgage. (A judicial foreclosure is sometimes called an “ordinary” proceeding in Louisiana.) (La. Code Civ. Proc. Ann. Art. 3722.)
If you don’t file an answer to the suit, the bank will get a default judgment. But if you respond to the lawsuit, the case moves through the litigation process, and—if you raise potentially valid defenses to the foreclosure—the case will likely go to trial. If the bank wins at trial, the court will enter a judgment that allows the bank to hold a foreclosure sale and use the proceeds to repay the mortgage loan.
Louisiana law doesn’t give a homeowner the right to prevent the foreclosure by getting caught up on payments. But the terms of the mortgage contract might allow you to reinstate.
Some states have a law that allows a foreclosed homeowner to “redeem” (buy back) the home after the foreclosure sale. Louisiana law, however, doesn’t provide a post-sale redemption period.
If the total mortgage debt is more than the foreclosure sale price, the difference is called a “deficiency.” Some states allow the bank to get a personal judgment, called a “deficiency judgment,” against the borrower for this amount.
In Louisiana, the bank can get a deficiency judgment by filing a separate lawsuit after the executory proceeding or by converting an executory foreclosure to a regular judicial foreclosure. But the court won’t issue a deficiency judgment unless the bank appraised the property before the sale in accordance with Louisiana law. (La. Code Civ. Proc. Ann. Arts. 2771, 2723.)
You can find Louisiana’s foreclosure laws in the Louisiana Code of Civil Procedure (Arts. 2293, 2631-2772, and 3721-3753), as well as the Louisiana Revised Statutes (§ 13:3852). 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 an attorney if you're facing a foreclosure.
While federal and state laws establish a structured foreclosure process, mistakes in foreclosures are common. If you think the bank or servicer has violated the law or you want to find out about different ways to fight a foreclosure, consider contacting a local foreclosure attorney. It’s also a good idea to contact a HUD-approved housing counselor if you want to learn about different loss mitigation options.