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Know Your Redemption Rights

Beware of Redemption Rights Scams

Redemption rights allow homeowners to redeem foreclosed property by paying the court for the foreclosed property plus interest and fees.  This includes the right to redeem the property from whoever purchased it at the foreclosure sale.  Generally, the homeowner has the option to remain in the home at no cost or even rent the home to others until the redemption period has expired.  After the sale date, this redemption period lasts for three months if the homeowner has paid less than one third of the principle balance of the loan and twelve months if more than one third of principle balance has been paid.   Homeowners may have other redemption rights depending on how much of the home is secured by mortgages.  It is important that you talk to an attorney about your rights in redemption if you are not clear on what your rights are. 

Be careful, scam artists that want to take advantage of a homeowner in foreclosure often fail to properly inform the homeowners of their redemption rights. After they buy the property at auction, they claim that homeowners must leave their house immediately, which is false. 

Homeowners have the option to sell their redemption rights, but it is essential to make sure that they get a fair deal.  Often, scam artists will buy these rights for little or no money under the guise of helping the homeowners remain in their home. The scams are usually initiated over the phone, through mail, or by door-to-door salespersons.  Homeowners need to be aware that their redemption rights are valuable.  Whoever owns these rights is entitled to the overage from the foreclosure sale - the amount paid by the buyer in excess of the outstanding loan balance, along with the interest accrued and any additional fees.  Selling someone redemption rights allows them to buy the property at a low value and claim the home's existing equity that would have otherwise gone to the homeowner.   

Again, contact an attorney if you are not sure of your rights in foreclosure.

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