The Importance of Knowing Your State’s Foreclosure Laws

Are you a homeowner who has fallen on hard times, even just temporarily?  If so, you are encouraged to familiarize yourself with your state’s foreclosure laws.  Even if your finances are in good standing, no harm can come from at least staying up-to-date with your state’s foreclosures laws.

As nice as it is to hear that there are a number of benefits to staying up-to-date with your state’s foreclosure laws, especially if you have fallen on hard financial times, you may be curious as to the importance of doing so.  As much as we would all like to believe that we, as homeowners, are able to buy our dream homes and live in them until we decide otherwise, life sometimes has other plans.  For example, should you lose your job or suffer the unexpected death of a spouse or live-in partner, you may be unable to make your monthly mortgage payments.  After time, you may be at risk for losing your home to foreclosure.  If and when that time comes, you will want to be prepared.

One of the many reasons why it is important for you to stay up-to-date on your state’s foreclosure laws is because of notice.  You, with great reason, would likely assume that your financial lender would let you know if your home is being foreclosed on.  However, did you know that not all state require lenders to do so?  For example, there is no law in New York State saying that lenders must notify buyers of an impending foreclosure.  Although most lenders will, many states laws dictate that a borrower does not officially have to be notified until court proceeding are ready to start.

Although there is a possibility of a court order or court approved foreclosure, many states allow lenders and borrowers to settle or at least work out an agreement out of court.  This process often moves much faster, in as few as one or two months.  On the other hand, court ordered foreclosures can take up to seven to nine months, possibly giving you more time in your home.  For that reason, your state’s required time frames for foreclosure proceedings is important to know and understand, as it can have an impact on when you need to vacate the property.

Another reason why it is important for you and other homeowners to familiarize yourself with state foreclosure laws is because of redemption rights.  If you have temporarily fallen on hard times, it is important to remember that you may recuperate.  For example, if you lose your job, you may be able to find a new job in a few months.  For that reason, redemption rights are important to know.  Once the foreclosure proceedings start, do you have a right to redeem your home?  In the state of Missouri, borrowers have redemptions rights even after the sale of a foreclosure property, provided the buyer was the original lender and provided that certain rules and restrictions are met.

As highlighted above, there are a number of benefits to familiarizing yourself with your state’s foreclosure laws, as well as staying up-to-date with them.  This is particularly important if you ever find it difficult to make your monthly mortgage payments on time, even just temporarily.