What Happens After Foreclosure ?
When the mortgage lender decides to proceed with the foreclosure of a house, the homeowner is informed of the same through a notice. After waiting for the necessary time period, the house is auctioned off so that the lender can get back some of the money that was lent to the borrower. |
Many people are curious about the foreclosure procedure and what happens after foreclosure. At the auction, the highest bidder becomes the homeowner. However, some states do have a redemption period. During this period, if the homeowner can repay the mortgage and the penalties in full, he or she can retain the ownership of the house even though it was auctioned off. In this case, the new owner has to be paid this money. (See Reference 1) In states which have no redemption period, the homeowner is evicted from the house and does not get a chance to buy back his or her house. If the house does not get auctioned, then the property is owned by the bank. (See Reference 1)
There are 3 kinds of foreclosure that are possible. They are non judicial foreclosure, judicial foreclosure and forfeiture. (See Reference 1) In the first type, the bank forecloses the house without resorting to filing of a suit against the homeowner. This usually occurs when the mortgage agreement has a clause that permits the bank to foreclose the house without resorting to court procedures. In judicial foreclosure, the bank has to file a suit against the homeowner to begin the foreclosure procedure. This is an expensive and long drawn procedure. In the last type, which is forfeiture, the homeowner signs a contract with a buyer where he or she gives up their rights to the property when the terms of the agreement are not fulfilled. A person can face any of these foreclosure procedures.
After the foreclosure occurs, the sheriff's office issues a deed. This deed has to be within a particular time period after the auction occurs. In case the auction was unsuccessful and no bidder bids, then the bank gets the deed from the sheriff's office. In case of a redemption period, the person can stay in the house. However, once this period expires and the person does not purchase the house back after paying the bid amount, interest and penalties, he or she is evicted from the house with the help of an order of eviction. (See Reference 1)
A judicial foreclosure is more beneficial for a person as it takes time for the court to assess the case. This way a person has gain more time to look for ways to avert the foreclosure. Having a good attorney to fight the case can help a person look for mistakes in the case. Also, when a judicial foreclosure occurs, lenders are more conducive to working out a loan modification plan or alternative ways of repayment as the court procedure can be expensive and long drawn. (See Reference 1)
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What Happens After Foreclosure
Many people facing foreclosures want to know can bankruptcy stop foreclosure. They think that if they file for bankruptcy, it can save their homes. Yes, it can, but it should not be your first option when looking for ways to stop foreclosure of your home. In fact, many people use bankruptcy as the last resort to keep their homes. (See Reference 1) 
