If you’re a homeowner in Delaware and you’re worried about defaulting on your mortgage or you’ve already missed a payment or two, understanding the foreclosure process can help you navigate the next steps and potentially avoid losing your home. Delaware’s foreclosure process is a judicial foreclosure, meaning it goes through the courts. Here’s what you need to know:

1. Missed Payments and What Happens Next

• Typically, if you miss payments for 90 days, the lender will send you a Notice of Default and reach out to discuss ways to bring your loan current. They may offer options to help you catch up on payments or modify your loan to make it more manageable.

2. Loss Mitigation Options

• During this pre-foreclosure period, the lender is legally required to tell you about alternatives that could help you avoid foreclosure. This includes options like a loan modification (changing the loan terms to reduce your payment), a repayment plan, or even a short sale if needed.
• Delaware law also requires lenders to notify you about the Foreclosure Mediation Program. This program can help you work with your lender, with the assistance of a neutral mediator, to try to prevent foreclosure.

3. If There’s No Agreement: Filing the Foreclosure Complaint

• If you and the lender can’t agree on an alternative and your payments remain unpaid, the lender will file a foreclosure complaint in the Delaware Court of Chancery. This is the official start of the foreclosure lawsuit, and you’ll receive a notice informing you of the case.
• At this point, you’ll have a limited time to respond to the lawsuit. You may choose to contest the foreclosure in court, especially if you believe the lender made an error or hasn’t followed proper procedures.

4. Judicial Hearing and Potential for Redemption

• After the complaint is filed, your case goes before a judge in a judicial hearing. If the judge rules in favor of the lender, a judgment of foreclosure is issued. This may include a redemption period, which gives you a last chance to pay off the overdue debt and avoid losing your home.

5. Foreclosure Sale

• If you’re unable to pay off the debt, your home will be scheduled for a public auction managed by the sheriff’s office in your county. Proceeds from the sale go toward repaying what you owe on your mortgage, along with any court and legal fees.

6. After the Sale: Deficiency Balance or Eviction

• If your home sells for less than the full debt amount, you may still owe the difference, called a deficiency balance. In Delaware, lenders can pursue this balance through a deficiency judgment.
• After the sale, you’ll receive notice to vacate. If you don’t leave on time, the lender can file for an eviction through the court.

Understanding Delaware’s Foreclosure Mediation Program

• Delaware offers a foreclosure mediation program that could be a valuable option if you’re at risk of foreclosure. The program provides an opportunity to meet with your lender and a neutral mediator to explore all options to avoid foreclosure if possible. This can help buy time and potentially find a workable solution to keep your home.

What to Do Right Now

• If you’re at risk of default or have already missed payments, don’t wait. Contact your lender to ask about loss mitigation options and participate in the mediation program if possible. Having these conversations early can increase the chances of a solution that works for you.

The Timeline and Your Options

• The foreclosure process can take several months, so use this time to explore every option and make sure you’re informed of your rights. Taking action early can make a big difference, and Delaware’s mediation program and judicial foreclosure process are designed to give you the time and resources to explore alternatives to foreclosure.
• A local cash home buyer can review your options with you, and even make you a cash offer for your house that would stop the foreclosure. If you are not able to afford the missed payments to reinstate your loan, this may be your best option for a fresh start.

Understanding these steps and knowing you have options can make a stressful situation feel more manageable. Reach out to Coastal Home Cash Buyers for more information on the foreclosure process in Delaware, or to review your options to avoid foreclosure.