Foreclosure in North Dakota

How a North Dakota foreclosure works, step by step

1. Generally, the legal foreclosure process can't start until you're at least 120 days behind.
2. At least 30 days and no more than 90 days before the case starts, a written notice must be served on the owner of record. It can be served by mail.
3. The notice must say that if the amount due isn't paid within 30 days, a foreclosure will be started. If you make up the default within 30 days after it's served, the mortgage is reinstated.
4. The lender then files a lawsuit in district court. The summons is served the same way as in any civil case, and the complaint must show which redemption period applies and whether the lender will ask for a deficiency judgment.
5. To take part in the case, you must serve a written answer within 21 days after you're served. If you don't, the judge can grant the lender a default judgment.
6. The court enters judgment for the amount due plus costs and orders the home sold. Notice of the sale runs in the county's official newspaper once a week for three weeks in a row, the last at least 10 days before the sale.
7. The sheriff, a deputy or a person the court appoints sells the home in the county where it sits, at a public auction to the highest bidder. The buyer gets a certificate of sale, which must be recorded with the county recorder within 10 days.
8. The court confirms the sale once it's satisfied the sale followed the law.
9. You can redeem within 60 days after the sale, unless the property is abandoned or is farmland. Until the redemption period ends, you keep the right to live in the home and to its use and rents.
10. If no one redeems, the buyer gets a deed when the redemption period ends, and the court can order the home turned over to the buyer.

Your first chance: the notice before foreclosure

The notice has to list what it takes to bring your payments current as of a set date, plus any taxes, insurance and upkeep the lender paid, each shown separately. If you make up the default within 30 days after the notice is served, the mortgage must be reinstated as though you had never defaulted.

If you also apply to your servicer for help, federal rules set a 30-day deadline to act on a complete application it gets more than 37 days before a foreclosure sale.

Read that notice the day it arrives. In my view, it's the best point to fix things, before there's a court case.

Don't leave too early: abandoned homes lose the redemption period

If a court finds the home abandoned, it can wipe out the redemption period in the foreclosure judgment. Proof can include an affidavit saying the locks were changed and no one with a right to live there asked to get in for at least 10 days.

You have the right to stay in your home during the whole foreclosure process. The North Dakota Housing Finance Agency (NDHFA) tells its borrowers to stay in their homes for now, because they may not qualify for help if they abandon the property.

So if you're behind, don't move out early unless you've decided to let the home go.

The sheriff's sale

The sale happens in the county where the home is, run by the sheriff, a deputy or someone the court appoints. It's a public auction to the highest bidder, held between 9 a.m. and 4 p.m. The sheriff can put off the sale for up to three days without new notice, but no more than twice.

If the home wasn't found abandoned, the new owner can keep or get rid of belongings left behind 30 days after the sheriff's deed is issued.

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 North Dakota, that's 15 months, and the first legal action is a court complaint.

North Dakota's own markers: a notice 30 to 90 days before the case, 21 days to answer once you're served, three weeks of sale notices, and 60 days to redeem after the sale.

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

Deficiency, surplus and buying the home back

If the home is a homestead you live in, with four or fewer units on up to 40 acres, the lender can't get a deficiency judgment for what's still owed. In other cases, it can get one for the gap between the amount due and the home's value set by a licensed appraiser the court appoints.

For a second mortgage on a debt made on or after August 1, 1993, the lender can sue you on the note instead, if it gives up the right to foreclose.

If the sale brings in more than is owed, the extra money goes to the court, which decides who gets it. If that surplus is under $1,000 and no one applies for it within 60 days, the court must send it to the county's general fund.

As the owner, you have the first right to redeem, by paying the winning bid plus interest at your loan's rate. If you redeem, the sale is undone and the home is yours again.

If you hope to redeem, line up the money before the sale, not after. The window is short.

Protections when you sell, lease or get offers

• A wholesaler must tell everyone in the deal, in writing, that they hold an equitable interest, may not be able to deliver title, and plan to profit from passing it on. If they don't, the seller can cancel any time before closing, without penalty, and keep the wholesaler's earnest money.
• A seller on a contract for deed can't cancel it without written notice to the buyer. The buyer then has six months to fix the default if more than two-thirds of the original debt is still owed, and one year in other cases.
• If you bought with NDHFA's FirstHome program, you signed an affidavit promising to live in the home and not rent or lease it to anyone, and NDHFA doesn't allow contract for deed agreements.
• Companies that offer mortgage or foreclosure help aren't allowed to charge you fees up front.
• The CFPB says a scheme that tries to get you to sign over title to your home, sometimes called "rent to buy," is a sign of a scam.

Two of these touch how I buy. The contract for deed rule touches seller financing, since it sets how a seller can cancel. And if your loan is from NDHFA, its terms touch taking over payments, a lease option and seller financing, so ask NDHFA before you agree to any of those. If a contract is assigned to another buyer, the wholesaler rule protects you. And don't stop talking to your lender while you weigh any offer, including mine.

Free help in North Dakota

• NDHFA: for loan customers. If your loan is with NDHFA, it asks you to contact it right away once you realize you're having trouble making your payments.
• NDHFA: HUD-approved housing counseling agencies (PDF). A list of counseling agencies that serve North Dakota.
• North Dakota courts: answering a civil action. Forms and a checklist for answering a summons and complaint.
• North Dakota courts: finding a lawyer. Legal Services of North Dakota, a nonprofit, gives free legal help to residents in many kinds of cases, based on income.
• North Dakota Attorney General: consumer complaints. North Dakota residents can file a complaint with the Attorney General's Consumer Protection Division.
• CFPB: find a housing counselor. Search HUD-approved counseling agencies in North Dakota.