If you’ve fallen behind on mortgage payments—and your home is located in South Carolina—you should learn what happens during a foreclosure in your state. In this article, you can find out about:
You’ll also learn about protections for homeowners, like the 120-day preforeclosure period under federal law and the opportunity to participate in a foreclosure intervention process under state law.
In most cases, federal law requires a loan servicer to hold off on starting a foreclosure until the borrower is more than 120 days' delinquent. (12 C.F.R. § 1024.41). This preforeclosure period provides ample time for you to submit an application to your servicer asking for a loss mitigation option (an alternative to foreclosure). You might be able to keep your home by working out a repayment plan or modification, for example. Or you could possibly choose to give up the property without going through a foreclosure in a short sale or deed in lieu of foreclosure.
Federal law also provides other protections to homeowners who’re facing a foreclosure, like a prohibition on dual tracking.
South Carolina foreclosures are judicial. To start the process, the foreclosing bank files a lawsuit in state court. In some South Carolina counties, foreclosures go through an equity court judge, called a master-in-equity, or through a special referee.
You’ll get notice about the suit when you’re served a summons and complaint, and you’ll get a chance to respond. In South Carolina, the borrower generally has 30 days to file an answer with the court. If you don’t file an answer, the bank can ask for—and likely receive—a default judgment from the court. But if you file a response, the bank can’t get a default judgment. Instead, it will probably ask the court for summary judgment. The court will grant summary judgment for the bank if none of the facts of the case are in dispute and you fail to present a valid defense. However, if the court denies summary judgment, then a trial may happen. If you lose at trial (or the court has granted summary judgment), the court will enter a final judgment of foreclosure against you and order the sale. The bank must publish a notice of the sale in a newspaper and post it in several public places. (S.C. Code Ann. §§ 15-39-650, 15-39-660).
In 2011, the South Carolina Supreme Court issued an Administrative Order requiring banks to serve people facing foreclosure with notice of the right to foreclosure intervention. You get 30 days from service of the notice to request foreclosure intervention; otherwise, the case can proceed.
The foreclosure intervention process is very similar to the usual loss mitigation process. That is, you apply, and the bank determines whether you qualify for an alternative to foreclosure. (To learn more, including eligibility requirements for foreclosure intervention, see Nolo's article on South Carolina Foreclosure Intervention.)
Also, the court that’s handling the foreclosure action may require that the parties participate in mediation.
“Reinstating” is when you catch up on the defaulted loan’s missed payments, plus fees and costs, to stop a foreclosure.
South Carolina law doesn’t provide a borrower with a right to reinstate the loan before the sale. But your mortgage contract might give you a specific amount of time to complete a reinstatement. Check your loan documents to find out if you get the right to reinstate and, if so, the deadline to do so.
Some states allow the borrower to redeem the property within a specific period after a foreclosure. In South Carolina, while the borrower technically can’t redeem the home after the sale, you might be able to get the property back by making an “upset bid.” An upset bid is when someone buys the home after the foreclosure sale by making a higher bid than the winning bidder at the foreclosure sale.
In South Carolina, if the bank doesn't waive a deficiency judgment in the foreclosure action, there is a 30-day upset bid period after the sale. (S.C. Code Ann. § 15-39-720, § 15-39-760).
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. South Carolina, however, doesn’t have an anti-deficiency law. So, the bank may recover a deficiency judgment. (S.C. Code Ann. § 29-3-660 and S.C. Rules Civ. Proc. Rule 71(b)).
You might be able to reduce the deficiency if you believe that the foreclosure sale price was less than the home’s actual value. To do this, in most cases, you may ask the court for an order of appraisal within 30 days of the sale. (S.C. Code Ann. § 29-3-680). (To learn more about the process for reducing the deficiency, talk to a foreclosure lawyer.) If the evaluation process determines that the sale price was indeed less than the property's fair market value, the deficiency will then be limited to the total outstanding debt minus the home's actual value. (S.C. Code Ann. § 29-3-740).
Under South Carolina law, you may waive your appraisal rights (S.C. Code Ann. § 29-3-680)—say, in the mortgage—unless the foreclosure relates to:
In South Carolina, the foreclosing party (usually the purchaser at the sale) may include an eviction as part of the foreclosure action and get a writ of assistance from the court.
If you want to learn more about the foreclosure process in South Carolina—or you want to find out if you have any potential defenses to a foreclosure—consider talking to a lawyer. It’s also a good idea to make an appointment to speak to a HUD-approved housing counselor, especially if you want to get information about different loss mitigation options.