Rhode Island Foreclosure Laws and Procedures

Learn about Rhode Island foreclosure laws.

By , Attorney · University of Denver Sturm College of Law

Before the foreclosure crisis, federal and state laws regulating mortgage servicers and foreclosure procedures were relatively limited and tended to favor foreclosing lenders. However, many federal and state laws now 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 Rhode Island sign a promissory note and a mortgage containing a power of sale. These documents usually give homeowners certain contractual rights after a home loan default.

So, don't get caught off guard if you're a homeowner behind in mortgage payments. Learn about foreclosure laws in Rhode Island and how the foreclosure process works, from missing your first payment to a foreclosure sale.

What Are My Rights During Foreclosure in Rhode Island?

In a Rhode Island foreclosure, you'll most likely get the right to:

  • receive a preforeclosure breach letter
  • apply for loss mitigation
  • participate in foreclosure mediation
  • receive notice of the foreclosure
  • 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 Rhode Island 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 the preforeclosure period, the servicer can charge you various fees. Also, in most cases, federal law requires the servicer to let you know how to avoid foreclosure, and most mortgage contracts require the servicer to send you a breach letter.

When Can a Rhode Island Foreclosure Start?

Under federal law, the servicer usually can't officially begin a foreclosure until you're more than 120 days past due on payments, subject to a couple of exceptions. (12 C.F.R. § 1024.41). This 120-day period provides most homeowners ample opportunity to submit a loss mitigation application to the servicer.

What Are the Different Types of Foreclosure in Rhode Island?

If you default on your mortgage payments in Rhode Island, 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. If you don't respond with a written answer, the lender will automatically win the case.

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 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 in Rhode Island opt to use the nonjudicial process because it's quicker and cheaper than litigating the matter in court.

What Are the Steps Involved in the Nonjudicial Foreclosure Process in Rhode Island?

Again, most residential foreclosures in Rhode Island are nonjudicial. Here's how the process works.

Mediation Notice Before Foreclosure Starts

Before the mortgage loan is 120 days delinquent and before initiating a foreclosure, the lender must provide a mediation notice to the borrower. Or the lender has to mail the notice:

  • within 60 days after the loan is released from automatic stay in bankruptcy proceeding or any similar injunctive relief ordered in state or federal court
  • within 60 days after a loan is no longer afforded protection under the Servicemembers Civil Relief Act (see below), or
  • within 120 days after the borrower initially failed to comply with a workout agreement. (R.I. Gen. Laws § 34-27-3.2).

The opportunity to participate in mediation applies to a first-lien mortgage on an owner-occupied, one- to four-unit residential property that serves as the borrower's primary residence. The mediation conference will take place in person or over the phone no later than 60 days following the notice's mailing. You don't have to pay to participate in a mediation conference. (R.I. Gen. Laws § 34-27-3.2).

If after two attempts, you don't respond to the request to appear for the mediation conference, or you fail to cooperate in any respect with the requirements of the program, or if a conference happens and the lender makes a good faith effort, but you can't come to a foreclosure avoidance agreement, the lender may proceed with the foreclosure action after getting a certificate from the mediation coordinator. (R.I. Gen. Laws § 34-27-3.2).

Because a foreclosure is voidable if the lender fails to comply with Rhode Island's mediation law (R.I. Gen. Laws § 34-27-3.2), talk to a lawyer right away if you think the lender didn't comply with the law. You might have a defense to the foreclosure. While the lender will probably be able to restart the foreclosure after complying with the mediation requirements, a delay could buy you enough time and the opportunity to work out a way to avoid losing your home. Also, if you want help dealing with your lender in mediation, a foreclosure lawyer can represent you in the process.

Rhode Island's mediation program is scheduled to end on July 1, 2026. (See HB5761).

Notice of Sale

The lender has to publish a notice of sale in a newspaper weekly for three weeks with the first publication at least 21 days before the sale, and mail the notice to the borrower at least 30 days before the first publication. (R.I. Gen. Laws § 34-27-4).

How Do Rhode Island Foreclosure Sales Work?

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, 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, subject to some limitations (see below).

If the lender is the highest bidder, the property becomes "Real Estate Owned" (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—that is, money over and above what's needed to pay off all the liens on your property—you're entitled to that surplus money.

What Are the Options Available for Borrowers During Foreclosure in Rhode Island?

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

Rhode Island law doesn't provide the borrower with the right to reinstate the loan. The terms of the mortgage contract, however, might give you this right. To find out if you get the right to complete a reinstatement, check your mortgage contract. Or the lender might agree to let you complete a reinstatement.

Does Rhode Island Have a Right of Redemption for Foreclosure?

One way to stop a foreclosure is by "redeeming" the property. To redeem, you have to pay off the full amount of the loan before the foreclosure sale.

Some states also provide foreclosed borrowers a redemption period after the foreclosure sale, during which they can buy back the home. Rhode Island law doesn't provide a post-sale redemption period after a nonjudicial foreclosure.

Filing for Bankruptcy

If you're facing a foreclosure, filing for bankruptcy might help. In fact, if a foreclosure sale is scheduled to occur in the next day or so, the best way to stop the sale immediately is by filing for bankruptcy.

Once you file for bankruptcy, something called an "automatic stay" goes into effect. The stay functions as an injunction, which prohibits the lender from foreclosing on your home or otherwise 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 about the options available, speak with a local bankruptcy attorney.

Foreclosure Protections and Military Servicemembers

The federal Servicemembers Civil Relief Act (SCRA) provides legal protections to military personnel who are in danger of foreclosure.

Rhode Island law extends protections under the federal SCRA to all national guard members on state active duty for a continuous period over 90 days. (R.I. Gen. Laws § 30-7-10).

Are Deficiency Judgments Allowed in Rhode Island?

In a foreclosure, the borrower's total mortgage debt sometimes exceeds the foreclosure sale price. 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—in our example, $50,000—from the borrower.

In Rhode Island, the lender can get a deficiency judgment after a nonjudicial foreclosure by filing a lawsuit.

What Are the Potential Consequences of Foreclosure?

A foreclosure could result in serious consequences, like lower credit scores, a deficiency judgment (as mentioned), or tax ramifications.

Read More Articles

Get tips on what to do—and what not to do—if you're facing a foreclosure.

Find out if foreclosures are on the rise.

Getting More Foreclosure Information

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

Getting Help

If you have questions about Rhode Island'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. It's also a good idea to talk to a HUD-approved housing counselor about different loss mitigation options.

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