If you default on your mortgage payments in Kansas, the servicer (on behalf of the loan owner, called the "lender" in this article) will eventually begin a foreclosure. Approximately half of the states, including Kansas, require the lender to file a lawsuit in court to foreclose. State law specifies how foreclosures work, and both federal and state laws give you rights and protections throughout the process.
If you get a loan to buy residential real estate in Kansas, you'll likely sign two documents: a promissory note and a mortgage. The promissory note is the document that contains your promise to repay the loan along with the repayment terms. The mortgage is the document that gives the lender a security interest in the property. If you fail to make the payments, the mortgage provides the lender with the right to sell the home at a foreclosure sale to recoup the money it loaned you.
If you miss a payment, the servicer can usually charge a late fee after the grace period expires. Most mortgage loans give a grace period of ten to fifteen days, for example, before you’ll incur late charges. To find out the grace period in your situation and the amount of the late fee, review the promissory note or your monthly billing statement.
If you miss a few mortgage payments, the servicer will probably send letters and call you to try to collect. In most cases, federal mortgage servicing laws require the servicer to contact you (or attempt to contact you) by phone to discuss foreclosure alternatives—called "loss mitigation" options—no later than 36 days after a missed payment and again within 36 days after each following missed payment. No more than 45 days after a missed payment, the servicer must let you know in writing about loss mitigation options that could be available, and assign personnel to help you. Some exceptions to a few of these requirements exist, like if you file for bankruptcy or tell the servicer not to contact you under the Fair Debt Collection Practices Act. (12 C.F.R. § 1024.39).
Many Kansas mortgages have a provision that requires the lender to send a breach letter if you fall behind in payments. This notice tells you that the loan is in default. If you don’t cure the default, the lender can accelerate the loan (call it due) and go ahead with the foreclosure.
Federal law generally requires the servicer to wait until the loan is over 120 days delinquent before officially starting a foreclosure. But in a few situations, like if you violate a due-on-sale clause or if the servicer is joining the foreclosure action of a superior or subordinate lienholder, the foreclosure can begin sooner. (12 C.F.R. § 1024.41).
Again, Kansas requires the lender to file a lawsuit in court to foreclose (Kan. Stat. Ann. § 60-601). The lender gives notice of the suit by serving you a summons and complaint. If the petition is personally served, the borrower gets 21 days to respond. (Kan. Stat. Ann. § 60-212). But if service is by publication, the borrower gets 41 days to respond. (Kan. Stat. Ann. § 60-307).
If you fail to answer the court action, the lender can get a default judgment from the court. The judgment will give the lender permission to hold a foreclosure sale. But if you respond to the lawsuit by filing an answer, the case will go through the litigation process. The lender might then request the court to grant summary judgment. A summary judgment motion asks that the court grant judgment in favor of the lender because there’s no dispute about the case’s critical aspects. If the court grants summary judgment for the lender—or you lose at trial—the judge will order the home sold at a foreclosure sale. The lender must publish the notice of the sale in a newspaper. (Kan. Stat. Ann. § 60-2410).
The process ends with a foreclosure sale. The lender usually makes a bid on the property using a "credit bid" rather than bidding cash. With a credit bid, the lender gets a credit up to the amount of the borrower’s debt. The highest bidder at the sale becomes the new owner of the property. The court must confirm the sale. (Kan. Stat. Ann. § 60-2410).
“Reinstating” is when the borrower brings the loan current by paying the missed payments (principal and interest), plus fees and costs. Completing a reinstatement will stop the foreclosure.
Kansas law doesn’t provide a borrower with the right to reinstate the mortgage before the sale. But the terms of the mortgage you signed when you took out the loan might provide this right. Review your loan paperwork to find out if you get the right to reinstate and the deadline for doing so.
Sometimes, a foreclosure sale doesn’t bring in enough money to pay off the full amount owed on the loan. The difference between the sale price and the total debt is called a "deficiency balance." Many states, including Kansas, allow the lender to get a personal judgment, called a "deficiency judgment," for this amount against the borrower.
Deficiency judgments are generally allowed in Kansas, but if the court determines that the bid at the foreclosure sale was substantially inadequate it can refuse to confirm the sale. It can also fix a minimum or upset price. A sale for the full amount of the judgment, taxes, interest, and costs is considered adequate. (Kan. Stat. Ann. § 60-2415(b)).
Also, if service was by publication, then the lender can't get a deficiency judgment—unless the borrower enters an appearance in the foreclosure, like by filing an answer. (Kan. Stat. Ann. § 60-307(b)).
Some states have a law that gives a foreclosed homeowner time after the foreclosure sale to redeem the property.
Under Kansas law, the redemption period is generally 12 months after the foreclosure sale. (Kan. Stat. Ann. § 60-2414(a)).
If you defaulted on the loan before paying off one-third of the original mortgage amount, the court will limit the redemption period to three months. The court may increase the redemption period by three months if you involuntarily lose your primary source of income during the initial three-month redemption period. (Kan. Stat. Ann. § 60-2414(m)).
Even if the borrower paid less than one-third of the mortgage loan, if the outstanding amount for all mortgages on the home totals less than one-third of the market value of the property, the court will set a 12-month redemption period. (Kan. Stat. Ann. § 60-2414(m)).
If a court determines that you abandoned the home, it can further shorten these time frames or eliminate the redemption period altogether. (Kan. Stat. Ann. § 60-2414(a)).
Except for mortgages covering agricultural lands or mortgages covering single or two-family dwellings owned by or held in trust for natural persons owning or holding such dwelling as their residence, the terms of the mortgage can waive the redemption period or may provide for a shortened redemption period. (Kan. Stat. Ann. § 60-2414(a)).
Foreclosure laws are complicated. Servicers and lenders sometimes make errors or forget steps. If you think your servicer or lender failed to complete a required step, made a mistake, or violated state or federal foreclosure laws, you might have a defense that could force a restart to the foreclosure, or you might have leverage to work out an alternative. Consider talking to a local foreclosure attorney or legal aid office to learn about your rights. A lawyer can also tell you about different ways to avoid foreclosure. Likewise, a HUD-approved housing counselor can provide helpful information (at no cost) about various alternatives to foreclosure.