Foreclosure comes in two forms:  Judicial and Non-judicial.  Judicial foreclosure proceedings are lawsuits filed in the District Court of Nebraska against the property owner to determine the amount owed and, if the owner is in default, it results in a publicly advertised Sheriff Sale of the real property.  The homeowner receives a Summons from the Sheriff along with a copy of the foreclosure lawsuit showing the amount due.  The homeowner has the right to dispute the amount owed and to seek an accounting of the loan and to demand proof that he bank has the right to foreclose.  Once the Court has determined the amount due and the right of the bank to foreclose, a Decree of Foreclosure is entered and the bank may then proceed to schedule public auction that is conducted by the County Sheriff.

A great advantage to homeowners caught in a judicial foreclosure proceeding is the availability of applying for a Stay of Foreclosure, something that is not available in the non-judicial Trustee Sales. 

In Nebraska, the homeowner in a judicial foreclosure proceeding has the right to seek a Stay of Foreclosure Request of either three, six or nine months, depending on how many years are left to pay off the mortgage.  The closer the loan is to being paid off, the longer the stay.   What that means is that the homeowner can delay the Sheriff Sale for 3, 6 or 9 months if they request a stay in writing to the Court.

If the mortgage loan matures in more than 20 years (which means that you have owned the home for less than 10 years if you have a traditional 30-year mortgage), then the stay is for 3 months.  If the mortgage loan matures in less than 20 years but more than 10 years, the stay is 6 months.  If the loan matures in less than 10 years, the stay is 9 months.  Again, you must file with the Clerk of the Court a written application to stay the foreclosure, and the application must be filed within 20 days after the Decree of Foreclosure is entered.  See Nebraska Revised Statute, Section 25-1506(a).

Is there a disadvantage to applying for a Stay of Foreclosure?  Yes, and it is a very real disadvantage if you are disputing the amount owed or the bank’s right to foreclose.  “When a defendant requests a stay of sale pursuant to § 25-1506, the defendant is precluded from appealing from the foreclosure decree. Production Credit Assn. of the Midlands v. Schmer, 233 Neb. 785, 448 N.W.2d 141 (1989); Federal Farm Mtg. Corporation v. Ganser, 145 Neb. 589, 17 N.W.2d 613 (1945); Ohio Nat. Life Ins. Co. v. Baxter, 139 Neb. 648, 298 N.W. 530 (1941); Carley v. Morgan, 123 Neb. 498, 243 N.W. 631 (1932); Ecklund v. Willis, 42 Neb. 737, 60 N.W. 1026 (1894); McCreary v. Pratt, 9 Neb. 122, 2 N.W. 352 (1879). A request for a stay of sale is also a waiver of any prior error in the proceedings. Id.”  Deutsche Bank National Trust Co. v Siegel, 777 N.W.2d 259, 279 Neb. 174, 182 (Neb. 2010).

So, getting an extra three to nine months to live in the home is great, but if the homeowner really wants to litigate the amount due and the bank’s right to foreclose it may be better to seek the protection of Chapter 13 bankruptcy rather than to surrender precious rights by filing for a stay of foreclosure.  But if all you are asking for is a few months to move then requesting a stay of foreclosure may be just the break you need.

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