How Many Chances Does Foreclosed Homeowner Have To Redeem?

HOW MANY CHANCES DOES FORECLOSED HOMEOWNER HAVE TO REDEEM?

By Bob Bruss

October 11, 2007

Editor's note: Robert Bruss passed away on Sept. 26, 2007. This was one of the last real estate columns he wrote. Inman News is publishing Bob's last work as a final salute to the nation's most well-known real estate writer.

DEAR BOB: How many chances does a homeowner have to reclaim his house after losing it at a foreclosure sale? Suppose I buy a foreclosed house from a bank. Does the original owner have a chance to make things right with the lender and get his house back even though the bank sold the house to someone else? If a buyer intends to make a foreclosed house his principal residence, should he or she have an attorney, or can the sale be handled between the bank and the real estate agent? --Tom B.

DEAR TOM: If a mortgage is foreclosed, state law in most states provides a redemption period after the court judicial sale. During this time, which varies between a few weeks and even up to 12 months in one state, the defaulting borrower can redeem his or her property by paying the high bidder at the foreclosure sale the amount of that bid.

However, most defaulting borrowers are broke and they do not redeem their properties. They have only one chance to redeem until the redemption period after the foreclosure sale expires.

When a deed of trust is foreclosed, and the property is sold at a nonjudicial sale, there usually is no redemption period after the trustee's sale.

If you are buying a foreclosed property from the foreclosing bank, your best protection of receiving marketable title is to insist on obtaining an owner's title insurance policy at the time of purchase. Unless there are title or legal complications, except where required by state law, most buyers of foreclosed property do not need an attorney if they obtain an owner's title insurance policy.

The new Robert Bruss special report, "17 No-Down-Payment Formulas for Use in a Home Buyer's Market," is now available for $5 from Robert Bruss, 251 Park Road, Burlingame, Calif., 94010, or by credit card at 1-800-736-1736 or instant Internet delivery at www.BobBruss.com. Questions for this column are welcome at either address.

(For more information on Bob Bruss publications, visit his Real Estate Center).