Your Rights During Foreclosure: What You Need to Know

Right to Proper Notice

One of your most fundamental rights is the right to receive proper notice before foreclosure proceedings begin. This includes:

• Breach Letter: Most lenders must send a breach letter giving you 30 days to cure the default before proceeding
• Notice of Default: Formal notification that foreclosure proceedings have begun
• Notice of Sale: Information about when and where your property will be sold
• Right to Cure: A specific time period to catch up on payments and stop foreclosure

Right to Communication with Your Lender

You have the right to communicate with your lender about alternatives to foreclosure. This includes:

• Loss Mitigation: Lenders must discuss options like loan modification, forbearance, or repayment plans
• Single Point of Contact: Many states require lenders to assign one person to handle your case
• Response Timeline: Lenders typically must respond to loss mitigation requests within specific timeframes

Right to Reinstate Your Loan

Before the foreclosure sale, you generally have the right to reinstate your loan by:

• Paying all past-due amounts
• Paying late fees and costs (if legally required)
• Paying any attorney fees and foreclosure costs incurred

The reinstatement right exists up until a certain point before the sale. The exact deadline varies by state.

Right to Redeem After Sale

Many states offer a redemption period after the foreclosure sale where you can reclaim your property by paying:

• The full sale price
• Interest and costs
• Any additional fees specified by state law

Protection from Discriminatory Lending

Federal laws protect you from discriminatory lending practices that may have led to your foreclosure:

• ECOA: Equal Credit Opportunity Act prohibits discrimination based on race, religion, national origin, sex, marital status, age, or public assistance
• FHA: Fair Housing Act provides similar protections for housing-related lending
• RESPA: Real Estate Settlement Procedures Act ensures proper disclosures and servicing practices

Right to Challenge Foreclosure

You have the right to challenge a foreclosure in court if:

• The lender didn't follow proper procedures
• You didn't receive proper notices
• The lender made errors in documentation or accounting
• You're a victim of predatory lending
• The lender cannot prove they own the loan (standing issues)

Right to Surplus Funds

If your home is sold at foreclosure for more than you owe, you have the right to claim the surplus funds (also called excess proceeds).

This is money that belongs to you - it's your equity that was built up in the property. Many homeowners don't realize they're entitled to these funds.

Servicer Rights and Responsibilities

Your mortgage servicer has legal obligations too, including:

• Accurate Payment Processing: Payments must be credited correctly and on time
• Clear Statements: You must receive regular, accurate account statements
• Error Resolution: Servicers must respond to and correct errors promptly
• Force-Placed Insurance: Restrictions on when and how they can charge for insurance

Military Special Protections

Active duty military members have additional protections under the Servicemembers Civil Relief Act (SCRA):

• Foreclosure stay without court order for servicemembers
• Interest rate cap at 6% on pre-service debts
• Protection from default judgments
• Extended time to respond to legal actions

State-Specific Protections

States offer varying levels of protection, including:

• Judicial vs. Non-Judicial Foreclosure: Some states require court supervision
• Mediation Programs: Many states require foreclosure mediation before sale
• Extended Notice Periods: Some states require longer notice periods
• Anti-Deficiency Laws: Protection from owing additional money after foreclosure

What to Do If Your Rights Are Violated

If you believe your rights have been violated:

1. Document everything: Keep copies of all notices, correspondence, and records
2. Contact an attorney: Many states offer free or low-cost legal aid for foreclosure issues
3. File complaints: With the CFPB, state attorney general, or banking regulator
4. Act quickly: Most violations have strict deadlines for raising objections