About half of the states have statutory redemption laws, which means that when your house goes to foreclosure and sells at an auction, you still have a limited amount of time, anywhere from two months to a year, to pay the foreclosure sale price and redeem your property. The reason some states have redemption laws is so that foreclosures do not sell for unreasonably low prices. If they do, the original owner will be more likely to be able to purchase the home, which is an incentive for the bidders on foreclosed properties to keep their bids up. During the redemption period, the homeowner can stay on the property.
File a form with the courthouse indicating that you intend to redeem your property.
Provide evidence of ownership, such as your deed. If you lost your deed, you can get a copy from the courthouse.
Be prepared to pay not only the amount of the foreclosure sale, but also a rate of interest to the buyer.
Wait to be contacted regarding the intent form you submitted.
Provide cash or certified funds where instructed, usually to the courthouse or public trustee, on or before the final day of the redemption period.
After you pay, the foreclosed sale is annulled and you own the property. You are still subject to any liens and encumbrances on record.
Often, secondary liens that were placed on your property are wiped out during the foreclosure process. It is possible that by waiting until the foreclosure has occurred to redeem your property, you won’t have to pay the liens.
See if the buyer of your foreclosed property is willing to buy your redemption rights from you. This way, if you cannot afford to redeem your property, you will be able to get some money out of the process. Buyers may be willing to do this in order to take ownership of the property sooner.
The amount it will cost you to redeem your property increases over time because of interest, late fees, attorney fees, court costs and title and appraisal fees. If the buyer had to pay taxes or insurance, you must pay that as well. It is up to you to find out the total amount it will cost you to redeem your house on the date you decide to do it.
It is unlikely that you will be able to get another mortgage during the redemption period. However, you may be able to get the money if your circumstances have changed.
- house image by hans slegers from Fotolia.com