Homeownership in Vermont runs higher than the national average. Ranked 6th in the nation, the Green Mountain State boasts homeownership at over 70%. Buyers looking for their own piece of the American dream sometimes look for alternative funding solutions, hoping to find a way to buy without going through the big banks. Hard money loans are one option for buyers willing to put their home or other owned real estate up as collateral to secure the loan. These are not loans offered by the big mortgage companies. Instead small group and individual investors typically offer these notes. They usually fund much faster than a traditional mortgage and also require much less paperwork.
Vermont Foreclosure Laws
In Vermont, all foreclosures are either managed by judicial sale or by strict foreclosure. Both are managed through the state court system, so it is largely considered a judicial foreclosure state.
In foreclosure by judicial sale, the court issues a judgement and order the home to be sold in order to satisfy the debt. A strict foreclosure means that the court gives over possession of the home to the lender without a public sale. This process is allowed if the court finds that the property is worth less than the amount owed by the borrower. Vt. Stat. Ann. tit. 12, § 4941.
Property Redemption after Foreclosure Sale
In some states, you can redeem (repurchase) your home within a certain period of time after the foreclosure. In Vermont, the redemption period is before the sale in a foreclosure by judicial sale, or after the foreclosure decree in a strict foreclosure.
When you can redeem in a foreclosure by judicial sale. In a foreclosure by judicial sale, you can redeem your home within six months from the date of the foreclosure decree, unless the court orders a shorter time. Vt. Stat. Ann. tit. 12, § 4946.The sale takes place once the redemption period expires. You can also redeem up to the sale. Vt. Stat. Ann. tit. 12, § 4949. You cannot redeem the home after the sale.
When you can redeem in a strict foreclosure. In a strict foreclosure, you may redeem the property within six months from the date of the foreclosure decree, unless the court orders a shorter time period of redemption, or you and the foreclosing lender mutually agree to a shorter period. Vt. Stat. Ann. tit. 12, § 4941.
Deficiency Judgments in Vermont
When a home to be sold in foreclosure is not going to bring in enough money to cover the borrower's debt, it is possible for the lender to request that the courts issue a deficiency judgment, forcing the borrower to continue paying the remaining debt, even after the home has been foreclosed.
Deficiency judgments are allowed in foreclosures by judicial sale. The lender can get a deficiency judgment against you in a foreclosure by judicial sale. (The plaintiff may request a deficiency judgment in the foreclosure complaint, and the deficiency is waived if not requested prior to the confirmation order. Vt. Stat. Ann. tit. 12, § 4954(d)). If the lender buys the home at the foreclosure sale, the deficiency amount is limited to the difference between the fair market value of the home and the total amount of the debt, plus expenses. Vt. R. Civ. P. 80.1.
Deficiency judgments are also allowed in strict foreclosures. The lender can get a deficiency judgment (which is limited by the fair market value of the property) by filing a separate lawsuit.
Deed in Lieu of Foreclosure
Homeowners in Vermont who are no longer able to make their monthly mortgage payments have the opportunity to enter what is known as a Deed in Lieu of Foreclosure. This is an alternative to fighting the timely and expensive foreclosure process while helping to save both the homeowner and lender time and money. In this agreement the two parties essentially decide to “call it even” as the homeowner volunteers to give over the property to the mortgage company so they are both able to avoid the foreclosure process. Many times, a “cash for keys” settlement can be agreed upon and property owners can get a small settlement to help offset their moving costs since they are helping the bank avoid the legal proceedings involved with foreclosures.
Grace Period Notice
After foreclosing party files lawsuit, borrowers in Vermont generally have 20 days to respond. In a foreclosure by judicial sale, the lender must mail a notice of sale to the borrower no fewer than 30 days before the sale date and publish the notice in a newspaper no fewer than 21 days before the sale. When the court issues a foreclosure judgment in a strict foreclosure, it may also transfer ownership to foreclosing party so long as there is no equity in the house in excess of the mortgage debt. There is no sale.
Service Member Mortgage Protections
The standard Statute of limitations is expanded for those who are in military or naval service of the United States or a member of the Vermont National Guard and ordered to state active duty, and at the time of entering such service or duty, had a cause of action against another person, or another person had a cause of action against him or her. Vt. Stat. Ann. tit. 12, § 553
High Risk Mortgage Protections
Some states have special protections in place for homeowners with very high interest rates or big balloon payments. In Vermont, all homeowners are subject to the same process of foreclosure. There are no additional protections for high risk borrowers in Vermont.
Additional State Laws
The maximum interest rate allowed by law is 12%. When considering loans in Vermont, the statutory interest rate for these types of unsecured, consumer loans is 12 percent. This is the maximum interest that can be charged on any personal, consumer loan in the State of Vermont. This is the maximum interest rate whether money is lent to the consumer by another individual or by a company.
Vermont is a homestead state. In Vermont, the maximum value of exempt property is $125,000. The legal value of the property is the amount appearing on the last completed county assessment roll at the county treasurer's office. If the debtor's property has a value greater than the allowed amount of $125,000, and is part of the homestead, the debtor may decide which portion of the property receives the homestead protections of the allowable amount.
Lender Licensing Requirements
A Mortgage Broker license is required of any company or sole proprietorship, who for compensation or gain, or in the expectation of compensation or gain, directly or indirectly negotiates, places, assists in placement, finds or offers to negotiate, place, assist in placement or find mortgage loans, other than commercial loans, on real property for others.