If you fall far enough behind on your mortgage payments in Montana, your loan servicer (on behalf of the lender or the subsequent loan owner, called an “investor”) will start a foreclosure, most likely a nonjudicial one. Montana foreclosure laws set out the specifics of the nonjudicial foreclosure process. Assuming you don’t successfully fight the foreclosure or work out a way to avoid it, your home is then sold to a new owner at a foreclosure sale.
While that explanation probably sounds pretty straightforward, Montana foreclosure laws are complicated, and federal laws and state laws give you rights throughout the process. Here’s a detailed description of what usually happens in a Montana foreclosure so that you know what’s supposed to happen and what you can do if you want to try to save your home.
When Does Foreclosure Start in Montana?
If the property is the borrower’s principal residence, in most cases, federal law requires the servicer to wait until the loan is more than 120 days delinquent before officially starting the foreclosure. In some limited situations, though, the foreclosure can start earlier, like if you violated a due-on-sale clause or if the servicer is joining the foreclosure action of a superior or subordinate lienholder. (12 C.F.R. § 1024.41 (2025).)
The 120-day preforeclosure period is a good time to apply for loss mitigation if you want to try to avoid a foreclosure. Federal mortgage servicing laws also provide other protections to people going through a foreclosure.
What Types of Foreclosures Are Permitted in Montana?
Home loan contracts in Montana are commonly “trust indentures” (deeds of trust) under the state’s Small Tract Financing Act (STFA). The STFA applies to properties that are 40 acres or fewer. Foreclosures under the STFA typically go through a nonjudicial process. Judicial foreclosures can also happen in Montana but are uncommon.
This article covers nonjudicial foreclosures under the STFA. To figure out if the STFA applies to your foreclosure, look at the loan contract you signed at closing. If the document says “Trust Indenture Under the Small Tract Financing Act of Montana,” then the STFA likely applies. To verify that that the STFA will govern the foreclosure process in your situation, check with a foreclosure lawyer.
How Does the Montana Foreclosure Process Work?
To start a nonjudicial foreclosure under the STFA, the trustee has to record a notice of sale in the county records and mail a copy to you at least 120 days prior to the foreclosure sale. (Mont. Code § 71-1-313 (2025).)
Montana law also requires the trustee to post the notice on the property 20 days prior to the sale, and publish the notice in a newspaper. (Mont. Code § 71-1-315 (2025).)
Options Available for Montana Borrowers During Foreclosure
The STFA permits the borrower to reinstate the loan at any time before the sale. (Mont. Code § 71-1-312 (2025).) Or you might qualify for an alternative to foreclosure after applying for a loss mitigation option.
Is There a Right of Redemption for Foreclosure in Montana?
In some states, a foreclosed homeowner has the right to redeem the home by paying off the full price paid at the sale, plus interest and costs, within a specified amount of time following a foreclosure.
In Montana, however, if the foreclosure is nonjudicial under the STFA, you don't get a right of redemption after a foreclosure. (Mont. Code § 71-1-318 (2025).) You can, however, redeem the property before the foreclosure sale.
Does Montana Allow Deficiency Judgments in STFA Foreclosures?
When a foreclosure sale fails to bring in enough to repay the mortgage debt, including fees and costs, the difference between the sale price and the total debt is called a “deficiency balance.” Many states allow the bank to get a judgment called a “deficiency judgment” for this sum against the borrower. But some states, like Montana, have anti-deficiency laws that prohibit or restrict deficiency judgments.
In Montana, a deficiency judgment isn’t allowed after a nonjudicial foreclosure of a trust indenture. (Mont. Code § 71-1-317 (2025).) A deficiency judgment also isn’t allowed in a judicial foreclosure of a trust indenture for an occupied, single-family residence. (See First State Bank of Forsyth v. Chunkapura, 226 Mont. 54, 734 P.2d 1203 (1987), Midfirst Bank v. Ranieri, 848 P.2d 1046 (1993)).
Military Servicemembers and Foreclosure Protections
The federal Servicemembers Civil Relief Act gives certain legal protections to military servicemembers who are facing a foreclosure. Some states also provide specific legal protections to military personnel.
In Montana, courts may stay civil proceedings related to a servicemember’s nonpayment on a mortgage for their primary residence or adjust the payment due. (Mont. Code § 10-1-903 (2025).)
Foreclosure Help in Montana
While this article provides an overview of a typical foreclosure in Montana, keep in mind that state and federal foreclosure laws are complicated, and cases can proceed differently depending on the circumstances. Also, servicers and banks sometimes make mistakes or skip steps, but most foreclosure errors go uncontested. In instances where the servicer or foreclosing bank omitted a required step, made an error, or violated state or federal foreclosure laws, you could have a defense that could force it to start the foreclosure over or you might have leverage to work out an alternative.
If you believe your rights were violated, talk to a local foreclosure attorney or legal aid office immediately. A lawyer can give you information about different ways to fight the foreclosure, as well as provide information about ways to avoid foreclosure, like with a loan modification. If you can't afford to hire an attorney, you might qualify for free legal help from the Montana Legal Services Association. Also, Montana Law Help provides information about foreclosures in Montana.
A HUD-approved housing counselor can also tell you (at no cost) about various options for preventing a foreclosure.