- A foreclosed home has gone through a complicated and byzantine system of procedures to finally come to market and end up for sale. You can be sure your foreclosed home is safe to purchase if it comes with title insurance. Title insurance ensures that you buy the home as a good-faith purchaser and are protected against an previous owner who later claims that the property is still his.
- A foreclosed home is owned by the financial institution that gave the previous home owner the mortgage. For example, if the previous homeowner received a mortgage from ABC Bank and then failed to repay the mortgage on time, the bank then repossess the home through the foreclosure process. However, sometimes a property is foreclosed because of a failure to pay taxes. These tax foreclosure properties are not owned by the bank, but by the government agency owed the taxes.
- There are two basic kinds of foreclosures: judicial and non-judicial. A judicial foreclosure is one where the lender sues the borrower in court because of a failure to pay the mortgage. A non-judicial foreclosure is one where the lender repossess the home without having to go to court. Some states allow for judicial foreclosure, others allow for non-judicial foreclosures and some allow both kinds.
- Foreclosure buyers should be aware of the buyer's right of redemption. A right of redemption is a period of time, typically specified by state law, in which a buyer has the right to come up with the outstanding mortgage amount and repay it. This essentially allows the home owners the right to buy the property back from the bank before they are removed from their home.
previous post