How to avoid foreclosure in Delaware

How foreclosure works in Delaware, step by step

1. Missed payments and the notice of intent to foreclose

   Under federal rules your servicer generally cannot start a foreclosure until you are more than 120 days behind. In Delaware, for an owner-occupied home with 1 to 4 units, the lender must also mail you a notice of intent to foreclose by certified and first-class mail and then wait 45 days before filing. The notice must state the amount needed to cure the default and list HUD-certified housing counselors.

   12 C.F.R. § 1024.41(f); 10 Del. C. § 5062B

2. The lender files in Superior Court

   The sheriff serves you with the complaint and a writ of scire facias. A Notice of Foreclosure Mediation and a Certificate of Participation form must be attached to the front of the complaint. Read them the day they arrive, because your deadlines start from the date you are served.

   10 Del. C. §§ 5061, 5062C(c), 5062D(b)

3. Meet a housing counselor and file the Certificate of Participation

   Within 30 days after you are served, meet with a HUD-approved housing counselor and file the Certificate of Participation with the court. Then give the lender and the mediator a completed financial worksheet at least 14 days before the conference. If you skip these steps you can still attend, but the mediation is less likely to work.

   10 Del. C. § 5062C(e), (f)

4. Answer the complaint

   Legal Services Corporation of Delaware says you must answer the complaint within 20 days after you are served or the lender can get a default judgment. In a case that is in the mediation program, the statute says an answer is not late if it is filed on or before the date of a scheduled mediation conference. Talk to a lawyer about your answer, because Delaware answers often must include a sworn affidavit of defense.

   10 Del. C. §§ 5062D(c), 5063

5. Mediation conference

   The court schedules a mediation conference for a date 45 to 75 days after the mediation notice was served on you. You must attend. The lender cannot seek judgment until the day after the scheduled conference.

   10 Del. C. § 5062C(c), (d)

6. Judgment and sheriff's sale

   If there is no agreement and the lender gets a judgment, the court issues a writ that tells the sheriff to sell the home. The sheriff must deliver a notice of the sale to you, or leave it at your home, at least 10 days before the sale, post notices, and advertise in newspapers for 2 weeks before the sale.

   10 Del. C. §§ 4973, 5065

7. Confirmation, deed and moving out

   The Superior Court must confirm the sale, usually about a month later. After confirmation the sheriff gives the buyer a deed and your right to redeem ends. If you have not moved, the lender or buyer can go back to Superior Court to have you removed.

   10 Del. C. §§ 5065, 5066

Delaware foreclosure deadlines to know

These are the periods written into the law. Your own dates are on the notices you received. If a notice and this page disagree, trust the notice and ask a counselor or lawyer.

Your rights as a homeowner in Delaware

Other Delaware protections

• 45-day notice of intent to foreclose

  For an owner-occupied home with 1 to 4 units, the lender cannot file a foreclosure case until 45 days after it mails a notice of intent to foreclose. The notice must state the amount to cure the default, give a phone number for reinstatement instructions, and list HUD-certified housing counselors. Exceptions include abandoned or surrendered homes.

  10 Del. C. § 5062B

• Loss mitigation affidavit before judgment or sale

  The court cannot enter judgment, and the home cannot go to sheriff's sale, unless the lender files a sworn affidavit that you had the chance to apply for the loss mitigation programs you may qualify for. If the affidavit is false, the case is dismissed and the lender cannot charge you fees or costs for it.

  10 Del. C. § 5062A

• No judgment before the mediation conference

  In a case covered by the mediation program, the lender cannot seek judgment against your property until the day after the date your mediation conference is scheduled.

  10 Del. C. § 5062C(c)(2)

• Limits on paid loan modification services

  A company that sells mortgage loan modification services cannot ask for or take any fee until you have signed a written agreement with your lender or servicer that includes the modification it obtained. The contract must let you cancel at any time without penalty.

  6 Del. C. §§ 2406C, 2408C

Delaware mortgage assistance programs

If the home is sold for more than you owe

Any money left from the sheriff's sale after the mortgage debt, interest and costs are paid must go to the person who owned the home at the time of the sale. Unclaimed excess proceeds are held by the Superior Court. The court's Project Rightful Owner lists unclaimed sheriff's sale money by county and explains the petition you file to claim it. If you prove your claim, you also receive interest from the time the money was moved to the court.

10 Del. C. § 5067

Ways to avoid foreclosure

Most of your options come from federal rules and from whoever owns or insures your loan, so they work the same way in Delaware as anywhere else. What changes by state is how much time you have to use them.

• Repayment plan
• Forbearance
• Payment deferral or partial claim
• Loan modification
• Reinstatement
• Short sale
• Deed in lieu of foreclosure
• Chapter 13 bankruptcy