Knowing Your Homeowner's Rights during a Foreclosure
2 of 4 in Series: The Essentials of Foreclosure Self-Defense
As a homeowner, you have rights during the foreclosure process, but those homeowner's rights can vary a great deal depending on your jurisdiction and situation. Your rights during a redemption period can also vary depending on the state where you live, whether you stay in the home or abandon it, and even the size of the parcel of land on which your home sits.
Questions to ask during a foreclosure
You should ask questions of someone in your area who can answer them, preferably an attorney who has experience in foreclosure law. Here are some of the questions you may need to have answered:
Does my area have a redemption period? If so, how long is it? Ask your attorney to explain any specifics.
How long after the sale do I have to move? If you live in an area with no redemption, can the buyer kick you out the next day, or do you have some time to move your belongings?
How does the bank have to notify me of the pending foreclosure? If the bank fails to notify you in the proper way, you may be able to file a suit to buy yourself some more time.
How long do I have prior to the sale to reinstate my mortgage? If you want to catch up on payments prior to the sale, make sure you do it before the deadline.
If something happens to the property prior to the expiration of the redemption period, who gets the insurance money? Do you get the money, or does it go to the bank or the investor who purchased your home?
Many of your rights and responsibilities are spelled out in your mortgage and promissory note. You also have rights under the Fair Debt Collection Practices Act and under the Truth In Lending Act.
The redemption period — buying back your home
Redemption is like a do-over. You lose your home at the foreclosure sale, but then you have an additional period of time to buy back your home from whoever purchased it at the sale. The only hitch is that you have to come up with the cash to cover what the buyer paid for the property at auction, plus interest and expenses that the person paid and filed an affidavit for having paid.
Not all states have a redemption period. Redemption periods range from a few days to up to a year, depending on the state and on your particular situation. In Michigan, for example, the redemption period is six months for most residential properties, 30 days if the property is abandoned, and a year for any parcels of property 3 acres or larger or any original mortgage that has been more than 50 percent paid off.
In some jurisdictions, the method of foreclosure determines whether you have a redemption period. For example, if the foreclosure is nonjudicial, you may have no redemption period, and the bank may not be able to pursue a deficiency judgment, whereas in judicial foreclosure, you may have a right of redemption, but the bank has the right to pursue a deficiency judgment.