Foreclosure Laws in Rhode Island (RI)Topic: Foreclosure
In Rhode Island, both judicial or in court and non judicial or out of court foreclosures are used. As with all states, where both types of foreclosures are pursued, the vast majorities of foreclosures are performed with the out of court process. This is because it saves the bank both time and money. The determining factor as to which method of foreclosure the bank will choose to use is whether or not the mortgage or deed of trust contains a power of sale clause. The power of sale clause is what gives the bank the right to do an out of court foreclosure. Most documents, these days, include a power of sale clause, but in those instances where the mortgage or deed of trust does not contain a power of sale clause, then judicial or in-court foreclosure is required.
To pursue in court foreclosure the bank must file a law suit to get a court order to foreclose after such a court order is obtained, the bank will proceed to the public auction of the home. The actual process of selling the home to get the money owed to the bank is the same in both judicial and non-judicial processes. Out of court foreclosure just saves the bank the extra expense and time of filing the original law suit with the court. Sometimes, but not very often, a power of sale clause will state specifically when and where and by what terms a sale of the property is to take place. In almost all cases, those specifics are not laid out in the mortgage or deed of trust.
The regular process of moving toward an auction of the home is as follows: At least twenty one days prior to the scheduled sale, the bank must advertise the sale in the local paper, that has circulation in the county in which the home is located. This ad must be run a minimum of once a week for each of the three weeks leading up to the scheduled sale date. Twenty days before the scheduled sale date, the bank must send the home owner a written notice of the upcoming sale. This must be sent by certified mail. It must also include both the time, and place of the sale. This letter must be sent return receipt requested. It must be sent to the homeowner at their last known address. There are some situations in which a person who looses their home at the public auction is allowed to but it back at the highest bid price, including additional costs, fees and interest, but this option varies from situation to situation.
In Rhode Island, deficiency judgments are allowed. This means that if the bank is not satisfied with the price the home sold for at auction, and they feel there is some chance they can obtain additional money by reissuing the former home owner for those funds, then they are allowed to sue the people for those funds. Of course, most banks realize that when a borrower has 'lost' their home to foreclosure, they don't have any other assets worth pursuing. This being the case, deficiency judgments are very rarely sought.