Foreclosure in the District of Columbia

How a District of Columbia foreclosure works, step by step

1. Generally, the legal foreclosure process can't start until you're at least 120 days behind.
2. For a home loan, the lender must send you a written notice of default by certified mail and by first-class mail, and also send it to the record owner if that's someone else. It comes with a mediation election form you can use to choose mediation.
3. To choose mediation, you return the election form and the $50 fee to the Mediation Administrator and the application to your lender, no later than 30 days after the notice was mailed. If you don't, the Mediation Administrator issues a mediation certificate to the lender no earlier than 45 days and no later than 60 days after the mailing.
4. If you elect mediation, the session must be scheduled to start no later than 90 days after the notice of default was mailed. Mediation must wrap up within 180 days of the mailing, unless both sides agree to add 30 more days.
5. The lender can't use its power of sale until the Mediation Administrator has issued a mediation certificate.
6. Next, the lender sends you a notice of intention to foreclose by certified mail and first-class mail. A copy must reach the Mayor at least 30 days before the sale date, and the 30 days start on the day the Mayor receives it. The mediation certificate and this notice are recorded in the District's land records.
7. You can still catch up until 5 business days before bidding starts at the sale.
8. The home is sold at a foreclosure sale on the date named in the notice.
9. After the sale, the buyer can't send a notice to quit, file to take possession or charge rent until a deed to the buyer is recorded at the Recorder of Deeds.

Mediation with a D.C. government mediator

After a notice of default, the lender must take part in mediation if you choose it. A neutral mediator helps you and the lender try to agree on options such as a loan modification, refinancing, a short sale or a deed in lieu of foreclosure. If you choose mediation, a foreclosure can't be started until the mediation is over.

The lender has to bring its loss mitigation analysis, a true copy of the mortgage and note, every assignment of the mortgage, and proof that it has standing to foreclose. If you miss a scheduled session without good cause, the Mediation Administrator issues a mediation certificate to the lender within 10 days.

If the lender gets a preliminary mediation certificate, you have 30 days to appeal to the Superior Court of the District of Columbia. While an appeal is pending, all foreclosure activity is on hold. If the Mediation Administrator finds the lender didn't act in good faith and the lender doesn't appeal within 30 days, the notice of default becomes void. A foreclosure sale is void if the lender files a notice of intention to foreclose without a final recorded mediation certificate.

Catching up before the sale

After the notice of intention to foreclose, you or someone on your behalf can cure the default up to 5 business days before bidding starts, but not more than once in any 2 calendar years in a row.

To cure, you pay in cash, by cashier's check or by certified check everything needed to bring the account current, including a reasonable late fee, but not amounts due only because the loan was accelerated. Curing puts you back in the same position as if the default or acceleration had never happened.

The sale, and the court route

The notice of intention to foreclose says the home will be sold at a foreclosure sale on a set date. A D.C. lender doesn't have to take you to court to foreclose.

A lender can still choose a judicial foreclosure when it's warranted for a particular loan. In a court case, the court can order the home sold and the money brought into court to pay the debt. The D.C. Code sections that set out the notices and mediation above don't apply to a judicial foreclosure case. If you end up in court, free counselors and lawyers are available in the courtroom to help.

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 the District of Columbia, that's 7 months either way. Without a lawsuit, the first legal action is the notice of default sent to the Mayor; with a lawsuit, it's filing a complaint.

Without a lawsuit, the D.C. deadlines set the pace: 30 days to choose mediation, a session that starts within 90 days of the notice of default, and a notice to the Mayor at least 30 days before the sale.

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

If the sale brings in less, or more, than you owe

In a court foreclosure, if the sale doesn't bring in enough to pay the debt, the court can enter a judgment against you for the rest.

If the lender buys the home at a trustee sale, it credits its bid against the debt and pays the trustee only the amount over the debt, plus the costs of the sale. If you think money was left over after a sale, ask the trustee in writing for the accounting, and get legal help.

Your right to cure ends 5 business days before bidding starts. Get help well before then, because the window closes early.

Protections when you sell, lease or get offers

• D.C. bans foreclosure rescue transactions done for pay or gain. That means a deal where you transfer the home, or an interest in it, during a default or foreclosure, and you're promised or given a way to get it back, such as a contract for deed, an option to buy, a land installment sale or a sale-leaseback.
• Anyone who offers or provides help with avoiding or delaying foreclosure is offering a foreclosure rescue service, and owes you a fiduciary duty. You can sue for damages or other relief over a practice the rescue law bans.
• If you rent out your house or a unit in it and plan to sell, you must tell your tenant in writing within 3 calendar days of getting or asking for a written offer to buy it.
• Federal law bans mortgage relief companies from asking for or taking any fee before you've signed a written agreement with your lender or servicer. The District's banking regulator warns that if someone asks you for money to help avoid foreclosure, it may be a scam.

These rules touch how I buy. The rescue law would reach a lease option, seller financing or taking over payments if the deal also gave you a way to get the home back later. The fiduciary duty may apply to anyone who offers help avoiding foreclosure. The tenant notice rule applies to any offer if you rent out your home or part of it. And don't stop talking to your lender while you weigh any offer, including mine.

Free help in the District of Columbia

• DISB: Foreclosure Prevention Program. Free foreclosure prevention counseling for D.C. homeowners who are worried about paying, behind, or in foreclosure.
• DISB: foreclosure mediation and prevention. The Foreclosure Mediation Program lets you and your lender meet face to face to talk about alternatives to foreclosure.
• DHCD: foreclosure prevention resources. Counseling through community groups for homeowners who are behind or facing foreclosure.
• D.C. Attorney General: consumer protection. The office works against deceptive, unfair and illegal business practices.
• CFPB: find a housing counselor. Search HUD-approved counseling agencies in the District of Columbia.