New Foreclosure Laws in 2025: Protecting Homeowners and Changing the Investment Landscape

Starting in January 2025, several new laws will reshape the foreclosure market, primarily aimed at giving distressed homeowners more protection and transparency. One major change includes enhanced notification requirements. Mortgage lenders are now required to notify borrowers who fall into default, not only about their rights and obligations but also that third parties, like family members or HUD-certified housing counselors, can be appointed to receive foreclosure notices on behalf of the borrower. This change is intended to increase the borrower’s support network and provide additional time to avoid foreclosure.

Another significant adjustment is a mandatory postponement of foreclosure sales if the property is listed for sale on a multiple listing service (MLS). If the borrower secures a purchase agreement, an additional delay of 45 days is required, allowing more time for the sale to close before the foreclosure can proceed. Additionally, the new legislation mandates that foreclosure sales must meet a minimum threshold—at least 67% of the property’s fair market value—ensuring that properties aren’t auctioned for unreasonably low prices.

Increased transparency in foreclosure auctions is also expected. For instance, the law will introduce greater requirements for disclosing conflicts of interest among real estate professionals involved in foreclosure transactions and will allow for online auction platforms, broadening access to potential buyers and encouraging fairer bidding practices.

These new laws are likely to slow down the foreclosure process, giving homeowners additional opportunities to sell their property and retain more equity before foreclosure. This shift aligns with a broader movement across states like California and New York, which are focusing on enhancing homeowner protections and ensuring foreclosure outcomes are fairer and more equitable.
For those involved in foreclosure purchases or real estate investment, these changes underscore the importance of being fully informed of the latest legal requirements in 2025.

Sources:

• Bornstein Law

• Credit and Collection News