If you’re facing a foreclosure—and you live in Indiana—you might be wondering what happens during a foreclosure in your state. Below you can learn about:
You’ll also learn about significant protections for homeowners in foreclosure, like the 120-day preforeclosure period under federal law and the opportunity to participate in a settlement conference.
If the home is your primary residence, the foreclosing party must mail a 30-day preforeclosure notice to you before filing a complaint (lawsuit) with the court. The notice must
Indiana foreclosures are judicial, which means they go through the state court system. To begin the process officially, the foreclosing bank files a lawsuit. You’ll get notice of the lawsuit when you’re served a summons and complaint. You then get 20 days to file a written response with the court. If the home is your primary residence, the summons must include a notice about your opportunity to participate in a foreclosure settlement conference to try to work out an alternative to foreclosure. (Ind. Code § 32-30-10.5-8). (Learn more about foreclosure settlement conferences in Nolo’s article Indiana's Foreclosure Mediation Program.)
If you don’t file a response to the lawsuit, the bank can ask for—and likely receive—a default judgment from the court. But if you file an answer, the bank can’t get a default judgment. Instead, it will likely file a motion for summary judgment. This motion asks that the court grant judgment in favor of the bank because there’s no dispute about the important facts of the case, your defense lacks merit, or your answer doesn’t show any wrongdoing on the part of the bank or servicer. If the court denies summary judgment, then a trial may happen. If the court grants summary judgment (or you lose at trial), the court will enter a final judgment of foreclosure against you. Once the bank gets a judgment against you, the court will order a foreclosure sale.
Before a property can be sold at a foreclose sale, the sheriff (the party that conducts the sale) must post a notice of the sale at the courthouse and advertise the sale in a newspaper for three weeks with the first advertisement occurring at least 30 days before the sale. The sheriff must also serve a copy of the notice of sale to you (the homeowner) at the time of the first advertisement. (Ind. Code § 32-29-7-3).
“Reinstating” is when the borrower catches up on the defaulted mortgage's missed payments, plus fees and costs, to stop a foreclosure sale from happening.
In Indiana, if the borrower reinstates before the court enters judgment, the foreclosure must be dismissed. If the borrower reinstates after judgment, but prior to the sale, the foreclosure must be stayed (postponed). The foreclosure can proceed if the borrower subsequently misses another payment. (Ind. Code § 32-30-10-11).
Some states allow the borrower to redeem the home within a specific period after a foreclosure. In Indiana, however, the homeowner can't redeem the property after a foreclosure sale. (Ind. Code § 32-29-7-13).
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a deficiency. Some states allow the bank to seek a personal judgment—called a deficiency judgment—against the borrower for this amount. Other states prohibit deficiency judgments with anti-deficiency laws.
Generally, deficiency judgments are allowed in Indiana. But, you might be able to avoid one. Indiana state law usually requires a three-month waiting period between the time that the foreclosing bank files the lawsuit and the order of sale. (Ind. Code § 32-29-7-3). If the borrower waives the waiting period with the bank’s consent, then the bank can’t get a deficiency judgment. (Ind. Code § 32-29-7-5).
This article contains citations to Indiana’s foreclosure laws 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.
Also, you should consider talking to a lawyer if you want to get more information about foreclosure procedures in Indiana or find out about potential defenses to a foreclosure. It's also a good idea to make an appointment to speak to a HUD-approved housing counselor if you want to learn about different loss mitigation options and how to apply for one.