Your Rights in a Foreclosure

Find about your loss mitigation rights, what foreclosure notices you’ll receive, your right to challenge the foreclosure, and more.

When you take out a loan from a bank or mortgage company to purchase a home, in exchange, you have to promise to comply with a payment schedule and agree that the lender can sell the property at a foreclosure sale if you fail to make the required payments.

If you’re facing a foreclosure, don’t panic—you have rights. These rights are based on federal law, state law, and the mortgage (or deed of trust) that you signed when you took out the loan.

Loss Mitigation Rights

Under federal law, the servicer must contact, or attempt to contact, you by phone to discuss loss mitigation options no later than 36 days after you miss a payment, and again within 36 days after each subsequent delinquency. No later than 45 days after missing a payment, the servicer has to inform you in writing about loss mitigation options that might be available, as well as appoint personnel to help you try to work out a way to avoid foreclosure. There are a few exceptions to some of these requirements, however, like if you've filed bankruptcy or asked the servicer not to contact you pursuant to the Fair Debt Collection Practices Act. (To get details, talk to a lawyer.)

Also, the servicer usually can’t officially begin a foreclosure until you're more than 120 days past due on payments. This preforeclosure period should provide you with ample opportunity to submit a loss mitigation application to the servicer.

Right to a Breach Letter

Mortgages and deeds of trust typically have a provision that requires the lender to send you a notice, commonly called a “breach letter,” informing you that the loan is in default before the lender can accelerate the loan.

The breach letter gives you a chance to cure the default and avoid foreclosure.

Notice of the Foreclosure

Depending on state law and the circumstances, the foreclosure will be either judicial or nonjudicial. In all states, you’re entitled to notice of a pending foreclosure.

Judicial Foreclosures

If the foreclosure is judicial, you'll get a complaint and summons telling you that a foreclosure has started.

Nonjudicial Foreclosures

You'll also get some kind of notice about a pending nonjudicial foreclosure. In some states, you might get a notice of default in the mail, which gives you a limited amount of time to get current and stop the foreclosure. You might also get a notice of sale that lets you know when the sale will happen. In other states, notice of the foreclosure might consist of publishing information about the sale in a newspaper and posting a notice on the property or in a public location. (To get details about the process in your state, see our Summary of State Foreclosure Laws.)

If the servicer makes an error and neglects to provide proper notice under state law, you likely have a defense to the foreclosure. You probably won’t be able to derail the proceedings permanently, but you might be able to force the servicer to issue a new notice and start the proceedings over again.

Right to Reinstate

State law sometimes allows the borrower to stop a foreclosure by getting current on the loan with a lump-sum payment covering overdue payments, fees, and expenses. You then resume making regular payments.

Right to Reinstate Based on State Law

Generally, under many state statutes, you must reinstate the loan by a specific deadline, like 5:00 p.m. on the last business day before the sale date or some other deadline.

Contractual Right to Reinstate

Also, many mortgages and deeds of trust give you the right to reinstate. Usually, the contract says reinstatement is allowed up until five days before the sale in a nonjudicial foreclosure or up until judgment in a judicial foreclosure. Check your loan documents, generally for a paragraph called "Borrower's Right to Reinstate After Acceleration" or something similar, to find out if you get a right to reinstate the loan and the deadline for doing so.

The Lender Might Allow a Reinstatement

Even if you don’t have a statutory or contractual right to reinstate, the lender might, after considering the situation, let you complete a reinstatement. If the lender refuses your request, consider asking a court to allow you to reinstate. A judge normally won’t want to foreclose if you have enough money to get caught up. Sometimes merely offering to reinstate in front of a judge will embarrass the lender into accepting the reinstatement.

Right to Redeem

All states permit borrowers in foreclosure to redeem the property before the sale, and certain states provide a redemption period after the sale. You would redeem the home by paying the full amount owed, plus fees and expenses, or by reimbursing the person or entity that bought the property at the foreclosure sale, depending on the situation.

Unfortunately, unless you can get a new loan, either kind of redemption might not be practical if you’re already behind in payments.

Right to Foreclosure Mediation

Some states, counties, and cities give homeowners who are in foreclosure the right to participate in mediation. Foreclosure mediation brings the borrower and foreclosing lender to the table with the goal of working out a loss mitigation option, like a modification or a short sale.

Right to Challenge the Foreclosure

You have the right to challenge the foreclosure in court. If the foreclosure is judicial, you’ll likely find it easier—and generally less expensive—to simply participate in the existing foreclosure lawsuit. But if the foreclosure is nonjudicial, you’ll have to file your own lawsuit to raise defenses to the foreclosure.

If the servicer made a mistake, violated the law, or you want to make the lender prove its case, you might want to fight the foreclosure in court.

Right to a Surplus

After a foreclosure sale, you might get a notice telling you who bought the property and the sale price. If the sale brought in enough to repay the loan, including all foreclosure fees and costs, and any other liens on the property, as well as some extra money, you’re entitled to the excess proceeds, called a “surplus.”

On the other hand, depending on state law, if the foreclosure sale doesn’t fully pay off the debt, you might be on the hook for a “deficiency judgment,” which is a personal judgment against you for the difference between the total debt and a lesser sale price.

Talk to a Lawyer

This article covers many of the rights you have in a foreclosure, but—of course—others exist. Your rights in a foreclosure can vary a great deal depending on your jurisdiction and situation. To get detailed information about your rights, consider talking to a local foreclosure lawyer.

To get information about various loss mitigation options, talk to a HUD-approved housing counselor.

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