Facing Foreclosure in Vermont?

Vermont uses judicial foreclosure. No law sets one length for the whole process. The sale waits on a judge, and no law sets how fast a court case goes. When 12 C.F.R. § 1024.41 applies to a principal-residence mortgage, the rule generally bars a servicer in an ordinary delinquency-based foreclosure from making the first notice or filing until the loan is more than 120 days delinquent. Limited exceptions apply to due-on-sale violations and joining a superior or subordinate lienholder's foreclosure. Some state notices that are only mailed to you can come during that wait. Vermont law sets these steps, each with its own minimum: Time to redeem: six months from the court's decree for a home you live in or farmland, unless the court orders less (12 V.S.A. § 4946(b)). Sale notice by mail: at least 30 days before the sale, sent after the redemption period ends (12 V.S.A. § 4952(c)). Newspaper notice: once a week for three weeks, the first at least 21 days before the sale (12 V.S.A. § 4952(b)). Earliest sale of a home you live in: seven months after you're served with the complaint, unless the court shortens the redemption period or you and the lender agree to less (12 V.S.A. § 4946(b)).

Often there are still ways to try, though none is guaranteed: (1) Reinstatement — paying what you're behind, plus fees, to bring the loan current, if your mortgage or your lender allows it. (2) Loan modification — if 12 C.F.R. § 1024.41 applies to a mortgage secured by your principal residence and no § 1024.30 exemption applies, including exemptions for small servicers, reverse-mortgage transactions, and qualified lenders, a complete application received more than 37 days before a scheduled sale generally requires evaluation for available options and a written decision; the rule does not require a particular modification. (3) Forbearance — a temporary pause on payments, if your servicer agrees. (4) Bankruptcy — filing generally creates an automatic stay that can stop a foreclosure sale while it lasts, though the stay has exceptions and can last only a short time in some cases. (5) Short sale — selling the home for less than you owe, if your lender approves.

Yes. Vermont has the Vermont Foreclosure Mediation Program. Who can use it and how to start depends on the program's rules (program details). Mediation gives you a chance to negotiate directly with your lender under the supervision of a neutral third party. This can result in loan modifications, payment plans, or other alternatives to foreclosure.

Vermont limits deficiency judgments: whether the lender can collect the rest depends on the loan, the kind of sale and the rules below. Vermont's deficiency judgment rules provide moderate protection. After judicial foreclosure, the court can enter a judgment for the difference between what you owed (plus the costs of the sale) and what the property sold for at auction, but only if the lender asked for it before the court confirmed the sale; otherwise it is waived (12 V.S.A. § 4954(d)). The $125,000 homestead exemption can protect a homestead from attachment and execution to collect a deficiency, with exceptions, including claims that already existed when the homestead deed was recorded (27 V.S.A. §§ 101, 107). The redemption period in the decree (six months from the decree for an owner-occupied home, unless the court orders a shorter time) comes before the sale and can give you time to pursue alternatives that may avoid deficiency (short sale, deed in lieu with deficiency waiver). Consult a bankruptcy attorney about discharging deficiency debt. Vermont's foreclosure statute bases the deficiency on the sale proceeds: the court may enter a deficiency judgment if the proceeds don't cover the costs of the sale and the amount owed to the lender (12 V.S.A. § 4954(d)). The statute says nothing about a fair market value credit.

Yes. HUD-approved housing counseling agencies give foreclosure-prevention counseling for free, and a counselor can help you talk to your servicer. HUD lists 7 approved counseling agencies in Vermont; its referral line is 1-800-569-4287.

As Vermont law sets it: $125,000. Protects up to $125,000 of equity in your primary residence from judgment creditors. Does NOT stop mortgage foreclosure. Vermont's homestead exemption (27 V.S.A. § 101) protects up to $125,000 in value of a homestead from attachment and execution by creditors. It does not apply to claims that already existed when the homestead deed was recorded (27 V.S.A. § 107) or to property taxes (27 V.S.A. § 108). The exemption is relevant if a deficiency judgment is pursued. The exemption does not protect against mortgage foreclosure itself.

Government-backed loans have their own rules on top of Vermont law. FHA requires a meeting or reasonable efforts to arrange one in covered defaults. Current rules allow approved remote methods; exceptions and timing requirements apply. VA and USDA set their own help options for the loans they back; the forbearance guide and loan modification guide explain each program's options, with the rule behind each one.

Under the federal PTFA, the new owner after a foreclosure must give bona fide tenants 90 days' notice before eviction, and must let tenants with bona fide leases stay until the lease ends, except that the lease can be ended on 90 days' notice if the unit is sold to a buyer who will live there. Under Vermont law, the writ of possession must be served on a residential tenant, and the foreclosing party can take possession no sooner than 30 days after the writ is served, or any longer time federal law requires (12 V.S.A. § 4946(d)).

Possibly. If a foreclosure sale brings in more than is owed, the extra is called surplus. The costs of the sale, the debt being foreclosed and other liens on the home, such as a second mortgage, are generally paid first, and in some states a court decides who gets what is left. In Vermont: Surplus proceeds from the foreclosure sale (above the debt and costs) belong to the former owner after junior lienholders are paid in priority order. The court, county clerk or trustee who handled the sale can tell you whether any surplus is being held.

Generally, no. HAF programs, including the Vermont HAF / Vermont Homeowner Assistance Fund, can't commit new money after September 30, 2026 (Treasury). If the program approved you before then, ask it about payments still being processed.

Possibly, with your lender's approval. In Vermont, a deficiency waiver (a release of the remaining balance) can be negotiated as part of a short sale approval. Short sales require servicer approval. Negotiate a written deficiency waiver as part of any short sale agreement. For an owner-occupied home, the redemption period in the decree is six months from the decree unless the court orders a shorter time, and it comes before the sale, so there can still be time to pursue a short sale after the foreclosure judgment (12 V.S.A. § 4946(b)). In mediation, the lender must consider a short sale among other foreclosure prevention tools (12 V.S.A. § 4633). Whether the lender can still collect the rest depends on the terms it agrees to.