How to avoid foreclosure in Vermont

How foreclosure works in Vermont, step by step

1. Missed payments

   Federal rules generally stop your servicer from starting foreclosure until you are more than 120 days behind. Your lender will mail a notice of default with a date to catch up.

   12 C.F.R. § 1024.41(f)

2. Summons and complaint

   The lender files a foreclosure case and serves you with the papers. Vermont legal aid says you must file a written answer within 21 calendar days of receiving the complaint. The papers must include a notice of your right to mediation and a request form.

   12 V.S.A. §§ 4932, 4632(c)

3. Ask for mediation

   Fill out the mediation request form and send it to the court right away. If you live in the home and it has four units or fewer, the court refers the case to a neutral mediator to look at options for keeping the home.

   12 V.S.A. §§ 4631, 4632

4. Judgment and redemption period

   If the lender wins, the court sets a redemption period, normally six months from the decree for a home you live in. During this time you can keep the home by paying the full amount due under the judgment.

   12 V.S.A. §§ 4941(d), 4946(b), 4949

5. Notice of sale and auction

   If you do not redeem and the court ordered a sale, the notice of sale is published for three weeks in a row and mailed at least 30 days before the sale date. You can still redeem any time before the sale.

   12 V.S.A. §§ 4949, 4952

6. Confirmation of the sale

   The lender asks the court to confirm the sale. Title passes when the confirmation order is recorded. Any extra money is paid out, and the lender must ask for any deficiency before the confirmation order is issued.

   12 V.S.A. § 4954

7. Writ of possession

   If you are still in the home, the court clerk issues a writ of possession at the lender's request. Vermont legal aid says you have 14 days to leave after the sheriff serves the writ.

   12 V.S.A. § 4941(e)

Vermont 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 Vermont

Other Vermont protections

• No foreclosure without a court case

  Nonjudicial foreclosure cannot be used on a dwelling house owned by a natural person or on farmland. The lender must go to court.

  12 V.S.A. § 4961

• Strict foreclosure only when there is no real equity

  The court cannot give the lender title without a sale unless it finds there is no substantial value in the property beyond the mortgage debt, other liens and unpaid property taxes. Any party can ask for a sale instead.

  12 V.S.A. § 4941(b), (c)

• Seven-month floor before a sale

  A home you live in as your main residence cannot be sold within seven months of service of the complaint, unless the court shortens the redemption period or you and the lender agree.

  12 V.S.A. § 4946(b)

• Right to mediation

  In covered cases the court must refer the case to mediation when you ask in time, and the lender must consider the foreclosure prevention tools that apply.

  12 V.S.A. §§ 4631 to 4637

Vermont mortgage assistance programs

If the home is sold for more than you owe

After a judicial sale, the confirmation order directs how the money is paid. Sale costs and the lender are paid first, then other lienholders in order of priority. Anything left must be paid to you as the mortgagor. Watch for the report of sale and request for confirmation, which must be mailed to you, and tell the court if you believe money is owed to you.

12 V.S.A. § 4954(a), (c)

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 Vermont 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