If you are a struggling homeowner facing foreclosure in the state of Montana, you should get familiar with your state’s foreclosure laws. For example, you should know that most Montana foreclosures are nonjudicial under what’s called the Small Tract Financing Act. This Act provides you with certain rights, including the right to cure the default (and reinstate the mortgage) before the sale, as well as prohibits the lender from getting a deficiency judgment against you after the foreclosure.
Read on to learn about some of the main aspects of Montana foreclosure law along with citations to the statutes.
The citations to Montana’s foreclosure statutes are:
You can find the Montana Code Annotated on the Montana state legislature’s website at http://leg.mt.gov/bills/mca_toc. If you need help finding the statutes, see Finding Your State’s Foreclosure Laws.
We’ve described the key parts of Montana’s foreclosure laws below. You can find more detailed articles on various features of Montana foreclosure law in Nolo’s Montana Foreclosure Law Center.
Most home mortgages in Montana are trust indentures (also known as deeds of trust) under the state’s Small Tract Financing Act (STFA), which is for properties that do not exceed 40 acres. This type of mortgage can be foreclosed nonjudicially (without a lawsuit) or judicially (with a lawsuit).
In a nonjudicial foreclosure under the STFA, the trustee (the third party that manages the foreclosure process) must mail a notice of sale to the borrower at least 120 days before the sale. The trustee must also:
If the mortgage is not covered by the STFA, the trustee must personally serve notice to the borrower 30 days prior to the sale and publish it in a newspaper or, if there is no newspaper in the county, post it on the property. Mont. Code Ann. § 71-1-224.
Montana law allows a court to stay (postpone) civil proceedings related to a service member’s nonpayment on a mortgage for a primary residence or to adjust the payment due. Mont. Code Ann. § 10-1-903. This law applies to any member of the Montana army or air national guard who is serving on full-time state active duty for at least 14 consecutive days (if it's ordered by the governor) or who is serving on full-time national guard duty. Mont. Code Ann. § 10-1-902.
“Reinstating” is when you catch up on the defaulted loan's missed payments (principal and interest) plus costs and fees in order to stop a foreclosure. (Learn more about reinstatement to avoid foreclosure.)
Under the STFA, the borrower can reinstate at any time prior to sale. Mont. Code Ann. § 71-1-312.
In some states, you can redeem (repurchase) your home within a certain period of time after the foreclosure.
In Montana, if the foreclosure is nonjudicial under the STFA, there is no right of redemption. Mont. Code Ann. § 71-1-318. If the sale is not under the STFA, the borrower gets one year to redeem the home following the sale. Mont. Code Ann. § 25-13-802. (To get details on redemption after a foreclosure in Montana, see Nolo’s article If I lose my home to foreclosure in Montana, can I get it back?)
When the total mortgage debt exceeds the foreclosure sale price, the difference is called a “deficiency.” Some states allow the lender to seek a personal judgment (called a “deficiency judgment”) against the borrower for this amount, while other states prohibit deficiency judgments with what are called anti-deficiency laws.
In Montana, a deficiency judgment is not allowed after a nonjudicial foreclosure of a trust indenture. Mont. Code Ann. § 71-1-317.
A deficiency judgment is also not permitted in a judicial foreclosure of a trust indenture for an occupied, single-family residence. See First State Bank of Forsyth v. Chunkapura, 226 Mont. 54, 734 P.2d 1203 (1987). (For a summary of the deficiency law in Montana, see Montana Laws on Post-Foreclosure Deficiency.)
The purchaser at the foreclosure sale is entitled to possession of the home on the 10th day following the sale. If the foreclosed homeowner does not leave, the purchaser may start lawsuit to evict the former homeowners. Mont. Code Ann. § 71-1-319.