Understanding Your Redemption Rights After Foreclosure – Get Your Home Back

Foreclosure is actually a good money making business in the world of real estate. Investors are making millions off foreclosure properties. Unfortunately they are thriving off individuals who are losing their homes. Below is a brief guide on foreclosure by power of sale 101.

Generally, a person can loan some amount against his property to a bank or other lending institution. The higher the market value of the property, the higher the loan amount will be. As soon as the contract is sealed, the mortgage loan is issued. This gives the lender the right to foreclose on the property if the money is not paid according to the loan terms.

The right of redemption is given to the property owner to redeem his or her foreclosed property back from the person who purchased it at the foreclosure sale. Many homeowners do not understand their redemption rights after a foreclosure. As a result they often miss the opportunity to buy their home back after the foreclosure auction.

Right of Redemption is totally different from the right of reinstatement because:

  1. The homeowner may still have a chance to redeem the property back, provided it is sold by judicial foreclosure.
  2. While the homeowner can reinstate their mortgage by paying the delinquencies, the redemption involves paying the redemption price, which means paying the outstanding principal balance including other fees and charges.
  3. A homeowner cannot invoke this right over his or her property at a trustee’s sale or sold under a trustee’s sale.

In other words, it is only under judicial foreclosure that the right of redemption can be called. This is the reason why judicial foreclosure is less preferred by lenders. In addition, it makes the house in question hard to sell since it is being held until the expiration of the redemption period.

How long can a redemption period last?

Redemption periods change from state to state. The calculation would be base on the home’s value when sold, and whether the proceeds of the sale are enough to pay off the secured debt on the property. If it is, the redemption period will last for 3 months, otherwise, 12 months. There are states that allow the extension of a redemption period if the foreclosure is found faulty or has resulted from fraud.

What Exactly Has to be Paid to Reclaim a Home with Redemption Rights?

The redemption price must be paid in order to redeem the foreclosed house. The original homeowner must pay the buyer the outstanding balance or the principal mortgage amount, including the taxes, costs and interest.

Redemption Rights As Seen by Foreclosure Investors

The original property owner can still buy the property back as long as the redemption value is produced. Before you purchase a foreclosed home, you need to know how long the redemption period will take. In some states, as soon as the property is purchased, the original homeowner has lost their right to buy the property back. If this is the case, your investment is safe and you can move on putting it on the market again. But, since it usually will take 12 months by most state’s laws, the original homeowner will have plenty of time to pay the redemption price which puts your investment at risk.

If possible eliminate this risk by buying the redemption rights from the homeowner either before the auction or shortly after. Foreclosed homeowners are typically in financial trouble, so your luck in negotiating might prove fruitful.

If you are a homeowner facing foreclosure or plan on investing in a foreclosure, knowing how the process works for both parties is essential. I urge you to speak with a professional and get familiar with your state’s laws

How to Stop a Foreclosure – Get Your Home Back After a Foreclosure

The common belief of many homeowners facing a foreclosure of their home due to the inability to pay the balance of their outstanding debt on time is that they only have a limited time to be able to save their homes. Once the property has been seized by the creditor or the financial institution, they would not be able to get their homes back since this would then be sold for the creditor to liquidate the property and thereby use the money to pay off your existing debt with them. This is not necessarily the case. In fact, there are a number of people who have gone through a foreclosure and have been able to get their homes back after it has been seized by the creditor or financial institution.

Reclaiming your home after a foreclosure is not a walk in the park, but it does provide some hope yet for many homeowners who have lost their homes this way. If you are one of the thousands of Americans who have lost his or her home as a result of a foreclosure, here are just some of necessary steps you would need to take.

The first thing that you would need to do to get back your home is to know exactly what your options are and the requirements each option may entail. Recently, the Congress has passed a legislation to help you with this process. Based on this recently passed legislation, creditors and other financial institutions are now required by law to be more lenient and generous in terms of the options that they can provide you in order to repay your outstanding loan and get your home back. A copy of this legislation has been uploaded over the Internet, so it is accessible to anyone who would like to know more about it.

Basically, there are three options that you can discuss with your creditor or financial institution in order to get your home back. Here are just a few of these options:

Forbearance

This type of arrangement would allow you to begin repaying your outstanding debt after an agreed period of time. By asking for a forbearance from your financial or creditor you are able to save up just enough funds which you can then solely allocate in order to repay your outstanding loan.

Full Payment

While this is the most preferred option of creditors and financial institutions, it is also the most difficult one to be met by the borrower. However, if you would be able to allocate the necessary funds through the help of friends or family members along with your savings, you would be able to provide a certain date when you can be able to pay the outstanding debt in full and get back your foreclosed home.

Repayment Plan

Another option that you can discuss with your creditor or financial institution in order for you to get your loan back is to make some adjustments on the existing schedule of payments that you have initially agreed to. Providing a hardship letter to your creditor or financial institution can increase the likelihood for your creditor or financial institution to give you a second chance. Some websites, can help you draft a letter of hardship which you can present to your creditor or financial institution.

Take Out another Loan

After going through a painful experience of a foreclosure, the last option any homeowner would ever think about to get their home back is by taking out a loan. However, taking out a loan to pay the outstanding balance of your existing loan or mortgage which has caused you to lose your home does have its benefits. For one thing, since the amount that you would need to loan or mortgage is relatively lower than the first amount that you took out, it follows that the payments you would need to make would be a lot lower. There are a number of different state agencies that would be more than happy to help you out of this situation. For a complete list of this, you can visit the Housing and Urban Development website.