What Happens After the Foreclosure Sale Date?
As a homeowner, the last thing you want to think about is losing your home to foreclosure. However, struggling with those hefty mortgage payments is more common a problem than you might think. This is especially true if you lose your job or the real estate market crashes. Even if you fall behind on your home loan payments to your lender, there are ways to get back on track and save your home from foreclosure and eviction proceedings. However, if you've exhausted your options and are facing foreclosure, it's important to know what happens after the foreclosure sale date.
Can You Get Your House Back After Foreclosure?
Did you know that you may be able to regain ownership of your house even after the foreclosure sale date? Many states allow homeowners to accomplish this under a process called statutory redemption. The right of redemption process differs from state to state. In general, you have a limited amount of time to pay the foreclosure sale price (plus interest in many cases). You must also pay any outstanding mortgage payments owed to your mortgage lender. You are usually allowed to stay in your home during the right of redemption period. This period of time can range from 30 days to two years.
Before starting the foreclosure process, your lender must notify you of default regarding any missed payments. If you cannot make up these missed payments in the time allotted in the notice, the lender will send you a notice of sale. If it is a judicial foreclosure, this process will take a bit longer, as the lender will require court approval for each step. If it is a non-judicial foreclosure, or foreclosure by power of sale, the lender does not need court approval throughout the foreclosure process.
Moving Out Voluntarily After the Foreclosure Sale Date
If you've stopped paying your mortgage, you can remain in your home until the foreclosure process is complete. Once the foreclosure auction occurs and the highest bidder is established, the right of redemption period starts. If a borrower cannot pay the foreclosure sale price in the time allotted, the title legally passes from the borrower to the new owner. Some owners may agree to rent the home to you, but most will want to take possession as soon as possible. Each state has specific laws and regulations governing this process, including the amount of time an owner must give you to vacate the property.
At this point you can move out voluntarily, attempt to redeem the property through statutory redemption, or wait until the sheriff shows up to execute an eviction. Because the eviction process takes time and money, some owners will actually pay you to move out voluntarily, a practice called “cash for keys." This arrangement spares you the hassle of an eviction and provides you with some extra funds to help with your relocation.
Eviction After Foreclosure
What happens after the foreclosure sale date if you've decided against moving out voluntarily? In that case, the new owner will try to force you out. This must be done formally through the court using the eviction, or "unlawful detainer", process. Once you've received a notice of eviction, you can still move out voluntarily. Otherwise, you will be escorted off of the property in a matter of days by local law enforcement.
It's also important to know that eviction can further damage your credit score, making it difficult to obtain a loan or convince a landlord to rent to you. Many housing applications, and even some job applications, will ask if you've ever been evicted. Landlords and employers can verify this information by examining your credit history, and the evictions listed in public records.
Rebuilding Your Finances After the Foreclosure Sale Date
Whether you move out voluntarily or are evicted, a foreclosure significantly damages your credit score. This makes lenders hesitant to give you loans and landlords question whether you'll pay rent consistently. As a result, you should start saving as much money as possible during the foreclosure process in case you need to pay a higher deposit to ease the concerns of your future landlord. Additionally, you'll need to focus on rebuilding your credit. You can do this by paying bills on time and getting control of your debt. After seven years, the foreclosure should disappear from your credit report, making it a little easier to become a homeowner again.
What Happens if My Landlord Goes Into Foreclosure?
It's also possible to be seriously affected by a foreclosure even if you don't own a home. This is the case for renters whose landlords fail to pay their bills. Despite not knowing that foreclosure is occurring, you could receive a notice to vacate the property – even if you have many months left on your lease. Fortunately, you should be given at least 90 days' notice. You may also be able to stay in the home until the end of your lease agreement and possibly sue your landlord to help cover the costs of relocating.
Be Prepared for What Happens After the Foreclosure Sale Date
Since foreclosure negatively impacts your housing, finances, and credit, it's important to consult an attorney early in the foreclosure process. Whether trying to avoid foreclosure, navigating the final stages of a foreclosure action, or completing a right of redemption, you should know your rights under your state's foreclosure laws and what to expect after the foreclosure sale date. Be prepared and make well-informed decisions by contacting a local real estate attorney or foreclosure attorney for legal advice.
Another great resource for homeowners in trouble is the U.S. Department of Housing and Urban Development (HUD). You can consult with a housing counselor free of charge through HUD's housing counseling program.
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