Foreclosure process in Rhode Island

Judicial or non-judicial?

Often non-judicial. A mortgage that includes the statutory power of sale lets the lender sell the property, “the benefit and equity of redemption” included, at auction on the premises, after giving the notices the statute requires (§ 34-11-22). A lender may instead file a court complaint to foreclose (§ 34-27-1). The mediation chapter confirms that a lender “may initiate a judicial foreclosure” (§ 34-27-9(d)(5)).

Timeline step by step

Counting the 30-day mailing and the 21-day ad rule together, the sale cannot happen sooner than about 51 days after the owner’s notice is mailed. The statutes read do not set a maximum length for the process, and delays depend on mediation, adjournments and any court challenge.

Mediation: who qualifies and what it does

The mediation law covers first-lien consumer mortgages on owner-occupied homes of one to four units that are the borrower’s primary residence (§ 34-27-9(c)(7), (k)). The mediation coordinator works for a Rhode Island HUD-approved counseling agency. The coordinator cannot impose a solution. If the parties reach a workout, they put it in writing. If the lender shows a good-faith effort but no deal is reached, the coordinator issues a certificate that lets the lender proceed, and the certificate must be recorded with the foreclosure deed (§ 34-27-9(h)). A lender that skips the process risks a voidable foreclosure (§ 34-27-9(m)). A homeowner who claims the rules were not followed has one year from the first published notice to file a complaint in superior court and record a notice of lis pendens (§ 34-27-9(p)).

Active-duty servicemembers have extra protection: with written notice to the lender, a sale is barred during active duty and for nine months afterward unless a court allows it (§ 34-27-4(d)).

Right of redemption

Under a power of sale, the auction conveys the owner’s equity of redemption, and the sale is “a perpetual bar” against the mortgagor and anyone claiming through the mortgagor (§ 34-11-22). The sections I read set no redemption period after an auction. A separate statute applies when a mortgagee takes possession: the mortgagor is barred from redeeming unless the full principal and interest are paid within three years after the mortgagee took actual possession (§ 34-23-3). The practical path is to act before the sale: reinstate, work out a modification, or sell.

Deficiency judgments

The power of sale lets the lender keep from the sale proceeds the debt, interest, costs, attorney fees, taxes and insurance, and requires it to pay any surplus to the mortgagor (§ 34-11-22). The chapters I read do not say whether, or how, a lender may sue for a shortfall after a sale, so I am not stating a rule. A Rhode Island attorney or the free legal help below can answer that for your loan.

Help for homeowners in default

• RIHousing HelpCenter. A HUD-approved agency that offers free, confidential counseling. Start by submitting its Financial Information Package; the phone is 401-457-1130 (RIHousing).
• Mediation. RIHousing provides mediation under § 34-27-9, free to homeowners.
• Federal protections. If a servicer gets a complete loss mitigation application more than 37 days before a sale, it generally may not move for a foreclosure judgment or order of sale, or hold the sale, unless the rule’s conditions are met, such as a denial of the application (12 CFR § 1024.41(g)).
• Scams. RIHousing warns not to pay high fees for foreclosure help; lenders and HUD-approved counselors help for free.

If you plan to sell instead, see the seller disclosure guide, the real estate attorney guide and capital gains on a home sale.