If you live in the District of Columbia—and you fall far enough behind on your mortgage payments—you’ll likely face a foreclosure. The process might be judicial (through the court system) or nonjudicial (out of court). In this article, you’ll get information about the nonjudicial process.
Under federal law, in most cases, a loan servicer must wait until the borrower is over 120 days' delinquent before officially starting the foreclosure process. (12 C.F.R. § 1024.41). During this time, you may submit an application to your servicer asking for a loss mitigation option (an alternative to foreclosure). You might be able to stay in your home by working out a repayment plan or modification, for example, or give it up without going through a foreclosure in a short sale or deed in lieu of foreclosure.
Federal law also provides other protections to homeowners facing a foreclosure, like forbidding dual tracking.
We’ve summarized important parts of the District of Columbia’s nonjudicial foreclosure laws below, and included citations so you can read the statutes yourself. Keep in mind that statutes change, so checking them is always a good idea. (If you need help finding the statutes, see Finding Your State’s Foreclosure Laws.)
How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consider consulting a lawyer if you’re facing a foreclosure.
In the District of Columbia, the foreclosing bank must give the following notices.
Notice of default. The bank must mail a notice of default to the borrower that includes the amount required to cure the default (get current on the loan). The bank must also record the notice in the land records. Recording the notice is considered the first official step in the nonjudicial process. (D.C. Code § 42-815).
Mediation notice. Along with the notice of default, the bank must include information on the availability of mediation and housing counseling services, including an application for loss mitigation programs and a mediation election form with envelopes addressed to the bank and the mediation administrator. The borrower must return the mediation election form to the mediation administrator and the bank, in the envelopes provided, no later than 30 days from the date of the mailing of the form to participate in mediation. (D.C. Code § 42-815.02).
Notice of intention to foreclose. If the borrower doesn't elect mediation (or participates in mediation but doesn't work out an agreement with the foreclosing party), the mediation administrator will issue a mediation certificate. The bank must then issue and send a notice of intention to foreclose that includes sale information to the borrower and a copy to the mayor at least 30 days before the sale. The 30-day period starts to run on the date the mayor receives the notice. (D.C. Code § 42-815).
Notice of the sale. The terms regarding notice of the sale are usually set out in the mortgage or deed of trust. In most cases, the deed of trust requires the trustee (the third party that handles nonjudicial foreclosures) to publicly advertise the sale. The trustee usually accomplishes this by publishing notice of the sale in the newspaper.
"Reinstating" is when a borrower brings the loan current by paying the missed payments of principal and interest, plus fees and costs, to stop a foreclosure. Borrowers in the District of Columbia can reinstate at any time up to five business days prior to the commencement of bidding at the foreclosure sale.
Under D.C. law, the borrower can’t reinstate more than once in any two consecutive calendar years. (D.C. Code § 42-815.01). But your loan contract might give you the right to reinstate or your bank might agree to a reinstatement.
In some states, a foreclosed borrower may redeem the home within a specific amount of time after the foreclosure sale. In the District of Columbia, however, the borrower doesn't get the right to redeem the home after the foreclosure sale.
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a "deficiency." Some states allow the foreclosing bank to seek a personal judgment, which is called a "deficiency judgment," against the borrower for this amount. Other states prohibit deficiency judgments with what are called anti-deficiency laws.
In Washington, D.C., the foreclosing party may sue the borrower for a deficiency judgment after a nonjudicial foreclosure. (D.C. Code § 42-816).
If you want to get more information about foreclosure procedures in the District of Columbia (nonjudicial or judicial) or would like to learn about potential defenses to a foreclosure, consider talking to a foreclosure lawyer.
Moreover, it's a good idea to make an appointment to speak to a HUD-approved housing counselor, especially if you want to learn about different loss mitigation options.