What is a redemption period
The redemption period is the period after the sheriff sale in the Minnesota non judicial foreclosure process.
This is the homeowners right to redeem the property. The redemption period is usually 6 months, but not always. There are rare and unique situations such as a homeowner having a lot of acreage in a rural area, or having 30%+ of the principle paid off on the mortgage, in these rare cases a homeowner may receive up to a 12 month redemption period. There are also circumstances, where a bank will file paperwork in situations where the house is proven to be abandoned by the homeowner. I won’t post the definition online here, it’s something you can research, but it’s usually related to a vacated property with disconnection of most if not all utilities. If the bank gets the paperwork filed successfully and proves abandonment of the property than the bank can accelerate the redemption period to only 5 weeks, this is obviously in the banks best interest and would save the bank thousands of dollars. As we stated above in almost all cases the homeowner has a 6 month redemption period. Typically a homeowner gets a few payments behind and right before that, receives a notice of default as to the term of the loan that the lender sends out to the homeowner. Quickly after the homeowner is forced to come up with all missed payments, plus late fees, plus any attorney’s fees up until this point. The lender is not going to take partial payments once it gets to this point, so the homeowner may find themselves stuck. An attorney for the bank will then file a foreclosure locally and by law will run in the public newspapers for 6 weeks prior to the sheriff sale. Their will be a sheriff sale auction, which often is only attended by a representative of the bank, but others are welcome to go to bid on the property. Often the bank pledges what’s owed on the property, but since about 2007, it’s become more popular for the bank to short themselves and pledge less than the original amount owing at the sheriff sale. If someone else were to outbid the bank, he/she would receive a sheriff certificate. After the sheriff sale, the owner of the sheriff certificate or the bank is playing a waiting game for the last 6 months of redemption. The homeowner now has to pay off all that’s owing as per the bank this may include the sheriff sale amount + any additional per diem fees, attorney’s fee, etc, it adds up fast. Often this is more than the original amount. A homeowner usually can’t come up with a full amount to pay it off as their credit won’t allow them to get a loan, so their only option often is to sell the house. This may work if very little is owing on the house, the sheriff sale comes in very low, or their is just a lot of equity. Most of the homeowners of houses we work with owe far too much on their house due to the economy, so they need to do a short sale. Please keep in mind when doing a short sale that some lenders will not negotiate after the sheriff sale, some will negotiate after the sheriff sale, but the biggest challenge we run into waiting until after the sheriff sale is lack of total time to submit offers, negotiate, get a BPO-brokers price opinion, get the house ready to list, get showings,
get an interested buyer, a purchase agreement, and wait for that buyer’s financing to come through. The homeowner needs to understand that full marketing time is needed, so it’s imparative to contact us as early as possible in the process. Often getting a short sale started well before the sheriff sale can even be less hurtful to your credit than waiting until the end. You should not wait for the redemption period to expire, and don’t let the bank take the property back, this will show up as a full foreclosure, and you could be waiting up to 5 years to purchase your next owner occupied home, and 7 years to buy your next investment non owner occupied home. If you sell your house as a short sale then your waiting period is as little as 2 years based on today’s underwriting guidelines, so it’s very important that you choose to hurry and do a short sale instead of letting the bank get your house back. Also the sooner you sell the house, the sooner the time clock starts the process of credit recovery, you need time to get your credit score back on track, so waiting and doing nothing never is the right answer. As a homeowner it’s easy to get overwelmed and not know what’s going on, what to do next, or feel it’s out of your control. I am writing you to tell you it’s not really your job to understand how it all works. almost no homeowner understands, especially if it’s your first time going through foreclosure, which it is for most people. We are experienced at this process and have been through this well over 1000+ times, so we know which paperwork to file, sign, submit to the bank, who to talk to with the bank, and how long each step, and more importantly in which order to do the steps. We know which pitfalls to avoid along the way, and it’s important to know, you will only get 1 chance to do this right, if you try to do this yourself, or with the wrong person, a mistake could cost you almost all marketing time and a full redemption period, then you end up waiting 5-7 years to get your next house, so don’t take a chance and give us a call today, we can meet with you, and go over the necessary steps of how it works, and put your mind at ease. There is a timeline here, and we want to get started sooner than later, so please give us a call. If you know of any friends, or family also with this situation please have them call us as well.
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