Foreclosure Process for Rhode Island

Understanding the foreclosure process in Rhodes Island could be useful if you are among the homeowners with this threat looming. As of December 2008, one out of every 14 homeowners in Rhode Island was behind on mortgage payments by at least three months. That means you're not alone if you're facing this problem.

What is a Mortgage?

If you borrowed money to purchase your home, that property is considered the collateral to guarantee payment of the loan, or mortgage. As such, the home can be taken -- or foreclosed on -- in lieu of payment if you are in default of the loan agreement. Default usually occurs when you miss more than one payment consecutively. At this stage, the lender (usually a bank) will often take steps to reclaim the property.

Methods of Foreclosure

Lenders in different states can reclaim the property in different ways. In Rhode Island, five methods are permissible by law: taking possession (used when the buyer has abandoned the home), going to court (judicial foreclosure), going through non-judicial foreclosure, evicting the homeowners, or asking the owners to give up the property on their own. According to Realty Trac, many foreclosures in the state never have to go to court.

Pre-Foreclosure

The pre-foreclosure period occurs the moment the lender sends you a notification that they intend to foreclose on the property and lasts until the property is officially foreclosed on. In Rhode Island, the owner must be notified by certified mail that the lender intends to sell the property at least 20 days before the first sales notification is posted publicly. Additionally, the notification must be published publicly for three weeks before the sale.

Post Foreclosure

Once the property has been reclaimed by the lender, it will be auctioned. The highest bidder at the auction receives the deed to the property as long as the winning bid meets the minimum amount set by the seller. The bidding is open to anyone, including the former owner and the lender. The money from the sale goes towards the primary mortgage first. If there is a surplus, the money goes to pay off any secondary mortgages or debts associated with the property.

Length of the Process

The foreclosure process in Rhode Island is one of the fastest in the United States because so often it can be resolved outside of the courtroom. The entire process takes around 74 days from the first notification to the auction. Once the property is sold through the auction, there is no redemption period so the owner cannot reclaim the home.

Preventing Foreclosure

Even if you are under threat of a foreclosure, you can save your property by first trying to work out an arrangement with the lender. Sometimes they will work with you by refinancing the loan or reducing your payments because foreclosure isn't a good deal for the lender either. You may also be able to stop the foreclosure process by paying the outstanding balance and bringing your mortgage up-to-date.