In an earlier article, I discussed the reinstatement period, which is the period in time between the start of a foreclosure and when the property is sold at auction. But even after the property is sold at auction, in some states, there is what is called a right of redemption.
Essentially, this is a short amount of time after the auction when the debtor still has the right to redeem his property if he can get past quite a number of hurdles. First, he must repay all past due amounts. Second he must pay all late fees. And third, he must pay all foreclosure related costs. Often doing all of these things is too difficult, especially since someone who is in foreclosure probably lacks the money in the first place, so this is rarely utilized.
In judicial foreclosure states, foreclosing can take a lot of time and money, so lenders may push for what is known as a deed in lieu of foreclosure. Instead of going through the whole foreclosure process the debtor gives the deed and the keys to the lender.
Now, why would the debtor want to do this? They might want to do this to avoid a hit to their credit rating and because the lender will typically give them some incentives to do this, so that they can avoid the costly foreclosure process.
There are other cases where deed in lieu of foreclosure can be used, but they are getting less and less common. In the past, when a debtor realizes that there is no possibly way to avoid default they may do a deed in lieu to get things over with and to avoid a larger hit to their credit rating. But nowadays, which the massive numbers of foreclosures and people seeing how long their neighbors are able to remain in their homes during the foreclosure process, many people are opting not to do this.
Foreclosure Investing: More Foreclosure Terms To Know
In an earlier article, I discussed the reinstatement period, which is the period in time between the start of a foreclosure and when the property is sold at auction. But even after the property is sold at auction, in some states, there is what is called a right of redemption.
Essentially, this is a short amount of time after the auction when the debtor still has the right to redeem his property if he can get past quite a number of hurdles. First, he must repay all past due amounts. Second he must pay all late fees. And third, he must pay all foreclosure related costs. Often doing all of these things is too difficult, especially since someone who is in foreclosure probably lacks the money in the first place, so this is rarely utilized.
In judicial foreclosure states, foreclosing can take a lot of time and money, so lenders may push for what is known as a deed in lieu of foreclosure. Instead of going through the whole foreclosure process the debtor gives the deed and the keys to the lender.
Now, why would the debtor want to do this? They might want to do this to avoid a hit to their credit rating and because the lender will typically give them some incentives to do this, so that they can avoid the costly foreclosure process.
There are other cases where deed in lieu of foreclosure can be used, but they are getting less and less common. In the past, when a debtor realizes that there is no possibly way to avoid default they may do a deed in lieu to get things over with and to avoid a larger hit to their credit rating. But nowadays, which the massive numbers of foreclosures and people seeing how long their neighbors are able to remain in their homes during the foreclosure process, many people are opting not to do this.
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