Louisiana Foreclosure Laws Become More Consumer Friendly

Many Chapter 13 bankruptcies are filed to stop a consumer from having their home foreclosed on by the mortgage company.

Louisiana, where I practice bankruptcy law, is a judicial foreclosure state, meaning that the procedure for seizing and selling a house requires a Creditor to file a lawsuit.  However, Louisiana is, for all purposes, a judicial foreclosure state in name only, since most foreclosure proceedings occur by a process known as “executory process.”

Executory process in a foreclosure proceeding means that the mortgage company simply files a notice with the court that they want the Sheriff to seize the property and sell it at auction.

There are some safeguards built into the system to protect the consumer, but very few, until a recent change that requires a notice of options that a consumer may have to avoid the foreclosure.

Act 339 of the 2013 Louisiana Legislative Session, entitled the Louisiana Home Protection Act went into effect on August 1, 2013 and now requires the Sheriff serving the Notice of Seizure to include information about options that might stop the foreclosure.

The Louisiana Home Protection Act, which was introduced by Louisiana State Senator Sharon Weston Broome requires a notice to accompany the Notice of Seizure advising the consumer that if the foreclosure involves a residential property:

• That the consumer may be able to bring their account current by entering into a loss mitigation agreement with their lender, or by paying all of the payments, costs and expenses owed by the consumer within the time permitted by law for reinstatement of the loan.
• That the consumer should consider seeking legal counsel, and further advises them that if they cannot afford to pay an attorney, they may be able to qualify for free legal services.
• That the consumer can get foreclosure prevention counseling services through a housing counselor, including loss mitigation services, free of charge.