Do THIS before Foreclosure

Before the foreclosure crisis, laws favored lenders. Now, federal and state laws offer significant protections for borrowers, requiring servicers to provide loss mitigation opportunities, account for foreclosure steps, and comply with regulations. In Indiana, homeowners usually sign a promissory note and mortgage, granting additional contractual rights.

• Your Rights During Indiana Foreclosure

In an Indiana foreclosure, you have the right to:

- Receive a preforeclosure notice

- Apply for loss mitigation

- Attend a settlement conference

- Be notified of the foreclosure and respond in court

- Get current on the loan and stop the sale

- Special protections if you're in the military

- Pay off the loan to prevent a sale

- File for bankruptcy

- Receive any excess money after a sale

• Preforeclosure Stage

The period after missing payments but before foreclosure is called "preforeclosure." During this time, servicers can charge fees and must inform you about avoiding foreclosure, typically through a breach letter.

• When Foreclosure Can Start

Under federal law, foreclosure can’t start until you’re over 120 days past due. This period allows time to submit a loss mitigation application.

• Indiana Foreclosure Process

A judicial foreclosure starts with the lender filing a lawsuit. You'll be served a summons and complaint, notifying you of the right to request a settlement conference. You have 20 days to respond. If you don’t, the lender may get a default judgment to proceed with the sale.

The sale can’t occur until three months after filing the complaint. The sheriff must post and advertise the sale notice, and serve you a copy.

• Foreclosure Sales

At the sale, the lender usually bids up to the amount owed. If a third party bids higher, you’re entitled to the surplus. The sheriff provides a deed to the purchaser and files it in county records. Post-sale, eviction may follow.

• Avoiding Foreclosure

To stop a foreclosure, you can:

- Reinstate the loan before judgment

- Redeem the property by paying off the loan before the sale

- File for bankruptcy, triggering an automatic stay

- Work out a loan modification, short sale, or deed in lieu of foreclosure

• Foreclosure Relief and Military Protections

Indiana offers COVID-19 relief through the Homeowner Assistance Fund. The Servicemembers Civil Relief Act provides additional protections for military personnel.

• Deficiency Judgments

In Indiana, lenders can seek deficiency judgments if the sale price is less than the debt owed. However, waiving the waiting period can prevent this.

• Potential Consequences

Foreclosure can impact your credit score, lead to deficiency judgments, and have tax implications.

• Getting Help

Consult a foreclosure attorney to understand your rights and defenses. HUD-approved housing counselors can assist. Use the CFPB’s Find a Counselor tool or call the HOPE Hotline for support.

Many people don't realize they can sell thier home before it falls to foreclosure. Having the right agent can help you unlock your equity and navigate a quick sale, which removes a huge stress and helps save your credit.