If you're a Rhode Island homeowner and you get far behind on your mortgage payments, you'll most likely lose your property to a foreclosure. Fortunately, under federal law, the bank must generally delay the foreclosure start for 120 days after you become delinquent on the loan. During this time, you can catch up on the missed payments or apply for a foreclosure alternative, like a loan modification. But if you and the bank can’t work out a solution, the foreclosure can proceed after the 120-day period elapses.
In this article, you’ll learn about foreclosure procedures in Rhode Island and the rights you can assert during the process.
Loss Mitigation Period Before Foreclosure Under Federal Law
Under federal law, the bank usually can't start the foreclosure until you’re more than 120 days delinquent on your mortgage payment. This waiting period gives the borrower a reasonable amount of time to submit a loss mitigation application and take steps to get back on track. (12 C.F.R. § 1024.41 (2024).)
Borrowers may also apply for loss mitigation even if a foreclosure has started.
How Foreclosures in Rhode Island Work
A bank can choose from two foreclosure methods in Rhode Island: judicial and nonjudicial foreclosure. Here’s a summary of each process.
Judicial Foreclosure Process in Rhode Island
This type of foreclosure goes through the legal system. The process begins when the bank files a lawsuit stating why it’s entitled to sell the home.
If the bank wins after proceeding through litigation, the court will enter the judgment. The judgment allows the bank to sell the home at a foreclosure sale and use the sales proceeds to repay the mortgage loan.
Nonjudicial Foreclosure Process in Rhode Island
Instead of going through the court system, in a nonjudicial foreclosure, the bank completes out-of-court steps explained in the state statutes (laws). Most banks use this type of foreclosure when available because it’s quicker and less costly than a judicial foreclosure.
Steps in a Nonjudicial Foreclosure in Rhode Island
In most cases, you can expect the bank to use the nonjudicial process in Rhode Island.
Mediation Notice
Rhode Island law requires lenders (or their agents or employees) to provide written notice that they may not foreclose on the mortgaged property without first participating in a mediation conference. This requirement applies to a first-lien mortgage on an owner-occupied, one- to four-unit residential property that serves as the borrower's primary residence. (R.I. Gen. Laws § 34-27-9 (2024).)
A mediation conference can occur in person or over the phone and involves the borrower, the bank, and a mediator. During the meeting, the participants will try to work out a way for the borrower to keep the home or give it up without going through a foreclosure. If the borrower doesn’t respond to two requests to appear at the mediation conference (or refuses to cooperate with the program), the bank can proceed with foreclosure. (R.I. Gen. Laws § 34-27-9 (2024).)
How Do Foreclosure Sales Work in Rhode Island?
Rhode Island law requires the bank to publish a notice of the foreclosure sale in a newspaper once a week for three weeks and mail the notice to the borrower at least 30 days before the first publishing date.
Reinstate the Loan to Stop a Rhode Island Foreclosure
Many states have a law giving the borrower the right to “cure the default” and stop the foreclosure by getting current on the loan in one lump sum payment. This process is called “reinstating” the loan.
Although Rhode Island law doesn’t give homeowners a reinstatement right, most mortgage contracts allow the borrower to reinstate under certain conditions. You’ll want to review your contract to determine whether you have a right to reinstate the loan.
Does Rhode Island Allow Deficiency Judgments?
In some cases, the borrower owes more than the amount received from the foreclosure sale. The difference is called a “deficiency.”
Example. Suppose Renton takes out a loan from a bank to buy a home. He borrows $300,000 but eventually loses his job and defaults on the payments (fails to make them). The bank then forecloses. At the foreclosure sale, the bank bids on the home with a credit bid in the amount of $270,000. No one else bids at the sale, and the bank gets ownership of the property. In this example, the amount of the deficiency is $30,000
Many states, but not all, allow the bank to get a deficiency judgment (a personal judgment) against the borrower for this amount. In Rhode Island, the bank can get a deficiency judgment by filing a lawsuit after the nonjudicial foreclosure and then take steps to collect the outstanding amount.
No Redemption Right After a Foreclosure Sale in Rhode Island
In some states, you can redeem your home after a foreclosure by reimbursing the new owner for the amount paid at the sale. Rhode Island law, however, doesn’t provide a redemption right following a nonjudicial foreclosure.
What Are Rhode Island's Foreclosure Laws?
To find Rhode Island’s foreclosure laws, go to the State of Rhode Island General Laws (sections 34-27-1 through 34-27-9 and 34-25.2-1 through 34-25.2-15). Statutes change, so checking them is always a good idea. How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some reasons to consider consulting an attorney if you’re facing a foreclosure.
Getting Help With a Rhode Island Foreclosure
Consider talking to a foreclosure attorney if you have questions about Rhode Island's foreclosure process or want to learn about potential defenses to a foreclosure and possibly fight the foreclosure in court.
It's also a good idea to talk to a HUD-approved housing counselor about different loss mitigation options.