Redemption Period Short Sales
Do you know what what a "Redemption Period" is?
Following a foreclosure sale, some states allow the homeowner one final chance to keep their home by giving them more time to completely payoff the mortgages on the property. Some states allow and additional 75 days after the sheriff sale while other states allow up to 12 additional months.
If you're an investor, this is a very important information for you to know about your state.
Let's face it, if a homeowner wasn't able to reinstate the loan (bring all payments current) before the sheriff sale, it's highly unlikely they will be able to pay the full loan amount during the redemption period. Therefore, most families decide to just stay in the house payment-free for the entire redemption period.
For the bank, it's bad enough that they haven't been paid for the past 6-8 months during the foreclosure process, now they won't get paid during a lengthly redemption period. And when the back finally does take possession of the property they need to make repairs, list the property and wait another period of time hoping it will sell.
Because of this, many banks will consider a short sale on properties after the sheriff sale and during the redemption period. If you are working on a deal in a redemption period state you can possibly work on properties even when homeowners contact you after the sheriff sale has already happened.
Furthermore, if you're working on a deal where the sheriff sale is close at hand and you need time to get a short sale package together, make sure the bank knows you're in a redemption period state. In many cases, the bank will permit you to move forward with the short sale.
Make sure as you build your case in your short sale package cover letter, you clearly document the losses the bank will incur during the redemption and resale periods. These cost are usually substantial and have a dramatic effect on the net amount the bank can expect to receive. Use this fact to you advantage as you negotiate you best deal.
Here's a few long Redemption Period States:
AL - 12 mo.
ME - 12 mo.
ID - 6 mo.
IL - 6 mo.
IA - 6 mo.
KS - 6 mo.
MI - 6 mo.
MN - 6 mo.
ND - 6 mo.
UT - 6 mo.
VT - 6 mo.
Following a foreclosure sale, some states allow the homeowner one final chance to keep their home by giving them more time to completely payoff the mortgages on the property. Some states allow and additional 75 days after the sheriff sale while other states allow up to 12 additional months.
If you're an investor, this is a very important information for you to know about your state.
Let's face it, if a homeowner wasn't able to reinstate the loan (bring all payments current) before the sheriff sale, it's highly unlikely they will be able to pay the full loan amount during the redemption period. Therefore, most families decide to just stay in the house payment-free for the entire redemption period.
For the bank, it's bad enough that they haven't been paid for the past 6-8 months during the foreclosure process, now they won't get paid during a lengthly redemption period. And when the back finally does take possession of the property they need to make repairs, list the property and wait another period of time hoping it will sell.
Because of this, many banks will consider a short sale on properties after the sheriff sale and during the redemption period. If you are working on a deal in a redemption period state you can possibly work on properties even when homeowners contact you after the sheriff sale has already happened.
Furthermore, if you're working on a deal where the sheriff sale is close at hand and you need time to get a short sale package together, make sure the bank knows you're in a redemption period state. In many cases, the bank will permit you to move forward with the short sale.
Make sure as you build your case in your short sale package cover letter, you clearly document the losses the bank will incur during the redemption and resale periods. These cost are usually substantial and have a dramatic effect on the net amount the bank can expect to receive. Use this fact to you advantage as you negotiate you best deal.
Here's a few long Redemption Period States:
AL - 12 mo.
ME - 12 mo.
ID - 6 mo.
IL - 6 mo.
IA - 6 mo.
KS - 6 mo.
MI - 6 mo.
MN - 6 mo.
ND - 6 mo.
UT - 6 mo.
VT - 6 mo.
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