Foreclosure in Delaware

How a Delaware foreclosure works, step by step

1. Under federal rules, your servicer generally can't make the first foreclosure filing until you're more than 120 days behind.
2. If the home is your main home, you live there and it has 1 to 4 units, the lender must send you a notice of intent to foreclose and then wait 45 days before filing. The notice has to explain the default and say how much it would take to catch up, including past-due payments, penalties and fees.
3. The court case is called a writ of scire facias on the mortgage. The sheriff tells you to appear and show any reason the home shouldn't be taken to pay the mortgage.
4. If your case is covered by the mediation program, a notice of foreclosure mediation is attached to the front of the complaint you're served with.
5. For an owner-occupied home with 1 to 4 units, no judgment can be entered until the lender files a sworn statement that you were given the chance to apply for any loss mitigation program you may qualify for.
6. If you don't appear in the case, the court enters judgment for the lender, along with a writ called levari facias that goes to the sheriff.
7. Notice of the sheriff's sale must be posted at least 10 days before the sale in 10 of the most public places in the county. A copy must be delivered to you, or left at your home, at least 10 days before the sale. The sale is also advertised in newspapers for 2 weeks before it happens.
8. The home is sold at a public sale. After the court confirms the sale, the sheriff gives the buyer a deed.

Delaware's mediation program

Mediation covers foreclosures of owner-occupied homes with 1 to 4 units that are the owner's main home. The exception is a loan held by the person who sold you the home, if they hold no more than 5 such mortgages.

• The mediation conference is set for no sooner than 45 days and no later than 75 days after you're served with the mediation notice.
• Within 30 days of being served, you have to meet with a HUD-approved housing counselor and file a Certificate of Participation.
• At least 14 days before the conference, you give a completed financial worksheet to the lender and the mediator.
• You and the lender both have to show up in person.
• The options on the table include catching up the loan, paying it off, a repayment plan, a loan modification, a deed in lieu of foreclosure, or moving out in exchange for a payment.
• The mediator can't force either side into a deal.
• Once a conference is scheduled, no judgment can be entered until the day after it.

Mediation doesn't pause your duty to answer the complaint. In a mediation case, though, your answer isn't late if you file it on or before the date of a scheduled mediation conference.

How long it takes

Foreclosure generally can't legally start until you're at least 120 days behind. Once it starts, how long you have until the sale depends on your state.

For FHA loans, HUD's time frame runs from the first legal action until the lender has clear title to the home and possession of it. In Delaware, that's 26 months, and the first legal action is a court complaint.

Delaware law adds its own waiting periods: 45 days after the notice of intent before the case can be filed, and, in mediation cases, a conference no sooner than 45 days and no later than 75 days after the mediation notice is served.

These are official markers, not a forecast. Your case can move faster or slower, so don't count on extra time.

After the sale

Once the sale goes through, the buyer holds the home free of your right to redeem it.

If the sale brings in more than the mortgage debt plus interest and costs, the extra money, called the surplus, goes to whoever owned the home at the time of the sale.

If you're thinking about selling to an investor

Delaware's Mortgage Rescue Fraud Protection Act protects homeowners from unfair or deceptive practices by foreclosure consultants and in foreclosure reconveyance deals.

• Someone who contacts you within 20 days before the advertised sale date and offers to buy the home, or to get an option to buy it, counts as a foreclosure consultant under this law.
• A foreclosure consultant can't collect any fee until every promised service is done, and can't take an ownership interest in your home.
• In a foreclosure reconveyance deal, you can cancel the transfer of the deed before midnight of the third business day after you sign.
• If the buyer resells the home within 18 months of a reconveyance deal, you must be paid at least 82% of the net proceeds within 90 days of the resale.
• You can sue under this law, and breaking it is a class A misdemeanor.

I think these rules are good for you. If you talk with me or with anyone else who buys houses, ask how this law applies to your deal, read every page before you sign, and use your right to cancel if something feels wrong.

Free help in Delaware

• Delaware State Housing Authority: foreclosure prevention. A HUD-approved housing counselor can review your situation, explain your options and work with you and your lender for free. The state's emergency mortgage assistance program isn't taking applications right now.
• Delaware State Housing Authority: housing counselors. The state's list of counseling agencies, by county.
• CFPB: find a housing counselor. Search HUD-approved counseling agencies near you.