Learn about South Carolina foreclosure laws.
If you're behind on mortgage payments for your South Carolina home, you should find out what happens during a foreclosure. In this article, you'll learn about South Carolina foreclosure laws, including:
- how much and what kind of notice you'll receive before a foreclosure sale
- whether get the right to repurchase the home after the sale (redeem it), and
- whether you might have to pay a deficiency judgment following the foreclosure.
You'll also learn about protections and rights for homeowners in foreclosure, like the 120-day preforeclosure period under federal law.
What Are My Foreclosure Rights in South Carolina?
In a foreclosure, you usually get specific rights under federal and state law, such as the right to pursue a loss mitigation option and, in most cases, certain contractual rights, like the right to get a breach letter.
Notification About Loss Mitigation Options
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. These requirements have a few exceptions, 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).
Federal law also provides other protections to homeowners facing a foreclosure, like a prohibition on dual tracking.
What Is a Breach Letter?
Many mortgages in South Carolina have a provision that requires the foreclosing bank 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 bank can accelerate the loan (call it due) and proceed with the foreclosure.
When Does Foreclosure Start in South Carolina?
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). However, a foreclosure can begin sooner 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. (12 C.F.R. § 1024.41).
What Options Are Available to Borrowers During Foreclosure?
The preforeclosure period provides ample time for you to submit an application to your servicer asking for a loss mitigation option. You might be able to keep your home by working out a forbearance, repayment plan, or modification. Or you might be able to give up the property without going through a foreclosure by completing a short sale or deed in lieu of foreclosure.
What Are the Different Types of Foreclosure in South Carolina?
Foreclosures in South Carolina are judicial.
Foreclosure Process and Laws in South Carolina
South Carolina foreclosures are judicial. The foreclosing bank files a lawsuit in state court to start the process. In some South Carolina counties, foreclosures go through an equity court judge, called a "master-in-equity," or through a special referee.
Summons and Complaint
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.
Judgment
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).
Reinstating the Loan Before a Foreclosure Sale in South Carolina
"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 give a borrower the 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 determine if you get the right to reinstate and if so, the deadline.
Redemption Rights in South Carolina
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).
South Carolina's Deficiency Judgment Laws
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 seek a deficiency judgment. (S.C. Code Ann. § 29-3-660 and S.C. Rules Civ. Proc. Rule 71(b)).
Limiting the Deficiency Judgment
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).
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).
However, 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:
- a dwelling place, as defined in S.C. Code Ann. § 12-37-250 (basically, if it is your permanent home and legal residence), or
- to a consumer credit transaction. (S.C. Code Ann. § 37-1-301(11)).
Talk to a foreclosure lawyer to learn more about the process for reducing the deficiency and to find out if you've waived this right.
After a South Carolina Foreclosure Sale
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.
What Are the Possible Consequences of Foreclosure?
A foreclosure notation will stay on your credit reports for seven years. This notation severely impacts your credit scores. (Your credit scores are based on the information in your credit reports.)
However, if you want to buy another property after a foreclosure, you might be able to qualify for a new mortgage sooner than seven years. How long you must wait before you can get another loan to buy another home depends on the type of loan and your financial circumstances.
Read More Articles
Learn about the statute of limitations for foreclosure.
Read about last-minute strategies to stop a foreclosure, including filing for bankruptcy.
Learn how filing for bankruptcy affects a foreclosure.
When to Seek Counsel
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 information about different loss mitigation options.
