Rights of a Homeowner After a Home Has Been Foreclosed
Homeowners have rights regarding their property, but foreclosure can change those rights. Many rights are stripped from the homeowner once foreclosure proceedings have begun. After foreclosure in most states, the rights of homeowners are completely extinguished. However, certain states do have laws that will protect homeowners even after a bank foreclosure, and knowing those rights is crucial if you have an intention of getting your property back.
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Default and Acceleration
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The foreclosure process varies by state, however, the same general guidelines must be followed. Once you've missed at least two monthly payments, the bank sends out a notice of default and begins collection calls. If you fail to respond or resolve the situation, the bank files a certified notice stating that it intends to accelerate the loan, meaning the entire balance of the mortgage will be due. In many cases, you have at least 30 days to resolve any past default on the mortgage before the loan acceleration occurs.
Foreclosure
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If the loan is accelerated and you again don't respond or aren't able to work out a suitable arrangement, the bank files a foreclosure proceeding with a prosecuting attorney in your state. The prosecuting attorney reviews the loan items along with the deed to the property and files appropriate paperwork with the courthouse. Depending on the state, you and the attorney might have to appear before a judge before a foreclosure is granted. In this proceeding, the bank is required to show evidence of your default and unless you are protected under a stay from a bankruptcy filing, the judicial foreclosure is normally granted.
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Foreclosure Sale
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Once foreclosure proceedings have begun, the bank hires a trustee (representative) to initiate the foreclosure sale. Foreclosure sales take place on the first Tuesday of every month on the steps of the county clerk's office, and properties are sold at auction to the highest bidder.
You have a right to the property up until the date and time of the sale. If you come up with the money to pay the defaulted amount, late fees and attorney fees one minute before the scheduled sale is to take place, you can exercise the right of redemption and remain in your home.
However, once the gavel has fallen on the sale of the property, you have no further rights regarding the property. If the property does not sell, the bank retains the property for later resale and you also lose any right to the property.
Eviction
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After a foreclosure sale, you're instructed to leave the property of your own accord within five days. Should you refuse to leave the property, the bank or new owner can have the sheriff's office for the county serve you with an eviction notice. At this point, the sheriff's office can have movers come in the property, remove all your personal items and leave them on the curb.
After Foreclosure
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In some states, you still maintain some rights to the property after the foreclosure sale. Many states offer a "right of redemption" clause in a foreclosure proceeding, meaning that if you pay the bank the total amount due on the home, late fees, court fees and a statutory interest rate set by the lender within six to 12 months of the foreclosure sale, you can reclaim your home. This only applies, however, if it was not sold at auction and the bank retained ownership of your property after the foreclosure sale. If the property was purchased at auction by a new owner, you no longer have any rights regarding the property.
You also can bid on the property in cash at the foreclosure auction or present the bank with a mortgage commitment from another lender. The specific rules and guidelines are different for every area in the country, and the right of redemption clause is not available in all states.
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