Foreclosure Investing: What are Right of Redemption Laws

Foreclosures is a situation in which a homeowner is unable to make full principal and interest obligations on his/her mortgage, which allows the lender to seize the property, evict the homeowner and sell the home, as specified in the mortgage agreement. One month after the homeowner misses a mortgage loan payment, he/she is in default and will be notified by the lender. Three to six months after the homeowner yearns for a mortgage payment, presuming the mortgage is still delinquent, and the house owner has not made up the missed payments in just a specific grace period, the lender will commence to foreclose. The particular farther behind the debtor falls, the more difficult it becomes to catch up since lenders add fees for payments that are 10 to 15 days past due.

Each state has their own foreclosure laws in the notices the lender must post publicly and/or with the homeowner, the homeowner's selections for bringing the loan current and avoiding foreclosure, and the method for promoting the property. In twenty two states – including Fl, Illinois, and New York ~ judicial foreclosure is the norm, meaning the lender must go through the courts to get authorization to foreclose by proving the borrower is overdue.

If the foreclosure is approved, the local sheriff sales the house to the highest bidder to try to recoup what the bank is owed, or the bank becomes the owner and sells the property through the traditional route to recoup their loss. The entire contencioso foreclosure process, from the borrower's first, missed transaction through the lender's sale of the home, usually will take 480 to 700 days and nights, in line with the Mortgage Bankers Organization of America.

The other 28 states – including Arizona, California, Georgia and Texas – mainly use non-judicial foreclosure, also referred to as the power of sale, which tends to be faster and will not go through the courts unless the homeowner sues the lender.

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Foreclosure Investing: What are Right of Redemption Laws

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