Legal Rights During Foreclosure
By Andra DelMonico, J.D. | Reviewed by Canaan Suitt, J.D. | Last updated on June 27, 2025 Featuring practical insights from contributing attorney Richard S. AlembikFacing foreclosure can be a stressful and nerve-wracking experience. You are facing a mountain of debt, past due mortgage payments, and risk losing your home. To protect homeowners in this situation, states have enacted foreclosure laws that afford protections. During the foreclosure process, borrowers can advocate for themselves and their legal rights.
What Is Foreclosure?
A foreclosure is a legal action a creditor takes when the borrower fails to make the contractually agreed upon payments. The borrower defaults on the loan, and the lender exercises their contractual right to legally possess the collateral, which is the named real estate.
Each state has laws that govern how a lender can pursue a foreclosure. These laws define the type of notice the lender must give, homeowner rights, and the general timeline for the foreclosure process.
The actual foreclosure, where the lender takes legal ownership of the property, is the last step in the process. Often, the lender and borrower will make multiple attempts to avoid foreclosure through alternative solutions.
Foreclosure laws are not consistent throughout the states. In 22 states, the standard is to follow a judicial foreclosure, in which the lender goes through the court to obtain foreclosure permission. In 28 states, a non-judicial foreclosure, sometimes called a power of sale, is the standard. These foreclosures do not go through the court system.
Judicial Foreclosure
A lender seeking a foreclosure in a judicial foreclosure state must obtain a court order to follow through with the foreclosure. A borrower may receive a notice from the lender. However, they will also receive a complaint and summons from the court where the property is located. The summons will explain that the lender filed a lawsuit against the borrower. The borrower will have a certain number of days to respond.
Failure to respond to the summons will result in a default judgment in favor of the lender. If you choose to respond to the summons, you will go through the judicial process, which can take years.
Non-Judicial Foreclosure
In a non-judicial foreclosure, the lender sends a notice of default to the borrower, which includes a notice of sale. How these notices are delivered and the information contained will vary based on the state law where the foreclosure occurs. On the date of sale, the lender sells the property and transfers a deed of trust. Because the lender does not have to go through the legal process, this type of foreclosure can happen much quicker.
Richard S. Alembik, a top-rated real estate attorney in Decatur, Georgia, explains the difference between judicial and non-judicial foreclosure: “Roughly speaking, nonjudicial means that you don’t have to go to court to auction off somebody’s property to recover for defaulted mortgage. It’s basically a contractual arrangement that allows you to sell the properly.”
Common Reasons for Foreclosure
The primary reason for a foreclosure is the borrower failing to make the agreed-upon loan payments to the lender. For borrowers who fail to make payments, the circumstances in their life often prevent them from making the required payments.
A foreclosure can also occur if a borrower breaches the other terms of the mortgage agreement. Examples include failing to comply with zoning regulations, building codes, or property taxes.
- Divorce
- Medical bills
- Job loss
- Overwhelming debt
- Death
- Default
- Adjust rate loans
- Sudden relocation
- Large tax bills
- Natural disaster
A foreclosure can also occur if a borrower breaches the other terms of the mortgage agreement. Examples of this would include failing to comply with zoning regulations, building codes, or property taxes.
Roughly speaking, [a nonjudicial foreclosure] means that you don’t have to go to court to auction off somebody’s property to recover for defaulted mortgage. It’s basically a contractual arrangement that allows you to sell the properly.
What Are My Legal Rights If My Home Is Being Foreclosed?
Homeowners are not powerless when facing foreclosure. State and federal laws afford them several rights to protect themselves and their home.
1. Right To Receive Notice
A lender cannot foreclose on your property without you knowing. You have a legal right to receive notice of a foreclosure proceeding. All states grant this right. Depending on the state where the property is located, the foreclosure notice could be a Notice of Default or a Notice of Sale. The specific type of notice you receive will depend on the type of foreclosure action.
2. Right To Reinstate the Loan
Homeowners have the right to seek alternative solutions in lieu of foreclosure. These remedies vary based on the state in which the foreclosure takes place. Your mortgage contract may also have terms that outline remedies available to the homeowner.
One option may be to make a lump sum payment to cover the missed payments, expenses, and fees. The foreclosure will stop, and the borrower will continue making on-time payments moving forward.
Another option may be to refinance with the lender through foreclosure mediation. The homeowner and lender could agree to a new loan arrangement. A lower monthly payment enables the homeowner to keep making payments. Once the new loan is in place, the foreclosure stops.
3. Right To Redemption
The right to redemption is the homeowner’s ability to save their home from foreclosure. This right is available in about half the states. Typically, this right is afforded to property owners through state statutes. After the foreclosure sale, the homeowner has a specific amount of time to repurchase their home from the individual or entity that bought the home. Depending on the state, the homeowner may be required to pay the full amount the buyer paid to purchase the property. In other states, they must pay the full amount they owe plus any foreclosure costs and fees.
Right of Redemption in Judicial Foreclosure States
Most states that provide a right to redemption are judicial foreclosure states. Some states do not have a statutory right but will allow the homeowner a chance to redeem while the post-sale formalities are completed.
Right of Redemption in Nonjudicial States
Very few non-judicial states offer a right to redemption to homeowners. The states that offer it have specific laws defining the right to redemption as only available for judicial foreclosures within the state and not non-judicial ones. Because the law can be complicated, speaking with a foreclosure attorney is best to understand your rights.
Can I Stay in My Home During the Foreclosure Process?
You can remain in the home during foreclosure procedures. During the pre-foreclosure phase, you will receive notices from the lender of the amount overdue and the impending foreclosure. This phase can last several months. As the judicial and non-judicial foreclosure process proceeds, you can continue to stay in your home. You own the property until the foreclosure process is completed.
In some states, you must vacate the property when the title changes hands. At this point, you are no longer the owner and do not have a legal right to remain on the property. In other states, you have a right to remain in the property until the post-sale redemption period expires.
When you work with a foreclosure attorney, they can tell you when you are required to leave. They can also explain your legal options for prolonging your time in the home. For example, you may be able to file for bankruptcy, placing the foreclosure procedures on hold. You may also have foreclosure avoidance or mitigation options to stop foreclosure proceedings.
Zombie Foreclosures
On occasion, a lender may begin the foreclosure process but does not follow through with completing it. There could be various reasons for this, from the foreclosure being canceled, the public auction never taking place, or the short sale date never getting set. In the meantime, the house sits waiting, and the property ownership remains in the homeowner’s name.
The vacant house will languish and deteriorate if the homeowner has moved out. The homeowner is then left with a house they cannot afford to renovate or restore. If the homeowner had not moved out, they would have had a better chance of maintaining the home and protecting its condition.
Alembik explains how many homeowners found themselves in a financial crisis because of zombie loan foreclosure. “Zombie loans are kind of a relic. A lot of times, these are the first mortgage holders. The purchasing mortgage holders would perform modifications of the loan, and they would basically leave the homeowners to think that the second loan would be wiped out. Often, they were written off the books by the lender, but they weren’t really canceled. The lien or the security need would still be active. The homeowner would not get installment payment notices,”
Can I Sue My Lender for Wrongful Foreclosure?
Yes, a homeowner can file a lawsuit against a lender for wrongful foreclosure. Grounds for a lawsuit could be the lender’s breach of contract, fraud by the lender, or failure to give property notice. Possible remedies available to the homeowner include monetary compensation, loan reinstatement, or other damages. Speaking with a lawyer will help you understand the damages available to you in your state.
A common example of a successful wrongful termination claim is when the lender incorrectly applies interest to the loan. The lender then incorrectly believes the borrower is not paying the correct amount. For your lawsuit to be successful, you must prove:
- The mortgage lender owed you a legal duty
- It breached that duty, and
- that breach was caused by the mortgage company
It is also wise to have a strong defense ready to explain why you couldn’t have remedied the situation to prevent foreclosure.
There is a statute of limitations for a wrongful foreclosure lawsuit. The time limit varies based on the applicable state law. If you think you have a wrongful foreclosure claim, do not wait to speak with a real estate attorney. Waiting could cause the time limit to lapse, barring you from recovery.
Homeowner’s Rights After Foreclosure
You still have rights after the home foreclosure is completed. Many states give homeowners a statutory right to any foreclosure sale proceeds exceeding the amount owed on the mortgage. However, this isn’t the case in all states. For example, Connecticut allows anyone with a record ownership interest or encumbrance on the real estate to make a claim for the surplus within 90 days of the sale. Any money that is not claimed goes to the state.
The sale of the property often won’t recoup the entire outstanding mortgage debt. In some situations, the lender may seek to recover the outstanding amount from the borrower. This is called a deficiency judgment. As the borrower, you can defend yourself against such lawsuits.
A third post-foreclosure action right is redemption. This is the homeowner’s ability to get the house back.
Finally, several programs are available to displaced property owners whose houses were foreclosed. State assistance programs allow homeowners to apply for grants or other financial assistance. The U.S. Department of Housing and Urban Development (HUD) also has housing counselors who can help homeowners secure housing.
Find Experienced Legal Help
Many of the rights homeowners have a focus on foreclosure prevention. There is a public interest to keep people in their homes. Federal and state laws try to balance this interest with the lender’s interest in getting repaid by affording homeowners certain protections. If you face the loss of your real estate, a foreclosure lawyer can help. A lawyer can explain your legal options and the best action to delay and stop the foreclosure. Your lawyer can communicate with the mortgage company on your behalf, helping to reduce your stress.
Visit the Super Lawyers directory to begin your search for an experienced real estate foreclosure attorney.
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