Selling a house in foreclosure: timelines and rescue-scam red flags

Foreclosure runs on two clocks: a federal rule before it can start, then your state’s notice periods before a sale.

Except in rare cases, your servicer cannot make the first foreclosure notice or filing until you are more than 120 days behind on the loan.¹

If your servicer receives a complete application for help more than 37 days before a scheduled sale, it generally cannot move for judgment or hold the sale while it reviews the application, and it must give you a written decision within 30 days.²

Judicial foreclosure

The lender sues, a judge enters a judgment, and the house is sold later. It is usually slower, and the court dates are on the public docket. Florida, New York and Wisconsin mainly use it.

Non-judicial foreclosure

The lender or a trustee sells out of court after mailing and publishing the notices state law requires. It is usually faster. Texas, California, Georgia, Nevada and Missouri mainly use it.

These are key statutory notices and minimums from each state’s law, not forecasts. Postponements, loss-mitigation reviews, bankruptcy and court calendars add time.

We have left out Massachusetts while we re-check its notice periods against the state’s own statute.

If you have equity, selling before the foreclosure date is usually the way to keep it.

The consumer bureau advises getting any deficiency waiver in writing, asking about relocation help, and noting that a deed-in-lieu can still bring a tax bill. Its blunt summary: the worst thing you can do is nothing.³

A HUD-approved housing counselor can review your options, often at little or no cost. The consumer bureau’s search tool uses HUD’s official list of counselors.⁸

Federal rules bar a foreclosure-help company from charging you before you have signed a written agreement with your lender or servicer on the offer it got you.⁴

The FTC says scammers demand payment up front, may try to get you to transfer your deed, and that once you do, you are not likely to get it back. Transferring the deed does not transfer the mortgage.⁵

• Upfront fees to stop a foreclosure or negotiate with your lender.
• Being told not to talk to your lender or a housing counselor.
• “Sign the deed over and rent it back” or “buy it back later.”
• A deed or power of attorney handed to you with the contract.
• Payment by wire, cashier’s check or payment app to the person helping you.
• Claims of government or lender approval.
• “Sign today or you lose the house tomorrow.”
• “We’ll take over your payments” while the mortgage stays in your name.

The FTC warns that sale-leaseback offers can carry hefty fees and high rent, that once you sell you no longer own the home, and that you should walk away if pushed to decide.⁶

In Florida, Missouri and Wisconsin these rights apply mainly when you keep a right to stay or buy back. In California and New York they can apply to a plain sale of a home in foreclosure to an investor.

Nevada requires foreclosure consultants to be licensed. We found no rescue-deal or equity-purchaser statute in Georgia.

The extra money from a foreclosure sale, after the debt and other liens are paid, belongs to you. In many states you can claim it yourself with a court or trustee form.

Be careful with companies that offer to recover it for a cut. Florida caps their share of a foreclosure surplus at 12%.⁹

In California, only your own lawyer may charge you to recover surplus from a trustee sale.¹⁰

Federal law generally gives a bona fide tenant at least 90 days’ notice after a foreclosure, and a lease can run to its end unless the new owner will live in the home. State law can give more time.⁷