Mortgagor
Redemption Period
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The period of Redemption for the borrower is the period of time after the Sheriff's Sale before they lose all ownership rights in the property. During the period of Redemption the borrower retains the right to occupy the property. During the Period of Redemption the borrower retains the right ot occupy the property and to stop the foreclosure by paying the amount bid at the Sheriff's Sale (not the amount of the loan) plus some miscellaneous costs. If the borrower abandons the property, the lender can go to court to shorten the Period of Redemption. The Period of Redemption will be 5 weeks, 2 months, 6 months or 12 months depending on the property and other factors.
Practical Tips Many people believe that the Sheriff's Sale their rights in the property and they volutarily leave the property. The mortgagor has the legal right to stay on the property during the period of redemption. Since they are no longer making the mortgage payments, this allows the mortgagor to save money while they prepare to find new housing after the period of redemption expires. Once the mortgagor leaves the property, the lender will often take over the property. Many lenders have someone drive by the property to check if the property is vacant. Make sure you continue to shovel the snow, mow the lawn and other activities that should that
you are still occuppying the property.
Sometimes the Lender will offer to pay the mortgagor in order to induce them to leave before the Period of Redemption expires.
The mortgagor does not have to accept the offer and should carefully consider the amount saved by staying on the property versus accepting the payment to leave early.
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Junior
Lien Holder Redemption Period
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Creditors that have liens against the property can file a Notice of Intent to Redeem which will give them the right to redeem after the mortgagors redemption period expires without redemption. Each such creditor has a
five day redemption period that runs in the order of their priority. The only exception
are holders of mechanic liens who redeem together. |
Right to Defeciency Judgment
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When a lender Forecloses by Advertisement, the lender is giving up their right to seek payment from the borrower if the property
is not worth enough to fully pay off the debt unless the loan isinsured by the Veterans Administration or the redemption period
for the foreclosure is 12 months. When a lender Foreclosures byAction, the lender is allowed to seek a judgment for the deficiency.
When using a Voluntary Foreclosure the lender cannot pursue a defeciency. If the Period of Redemption is reduced to 5 Week
Redemption, the defeciency rules remain the same as above; if the underlying foreclosure is by advertisement generally the
lender cannot seek a defeciency, if the underlying foreclosure is by action the lender can seek a defeciency judgment.
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