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Foreclosures, Repossessions and Right of Redemption
- Published: May 18, 2010 by Umma Queenan Comments (0)
Foreclosures, Repossessions and Right of Redemption
Unfortunately, there are times when debt gets the best of us, and we stand to lose everything we have worked so hard to obtain. When we default on loans against real or tangible property that was offered as collateral for a loan, the lender can seize the property for resale to cover the outstanding debt.
In real estate this is known as ‘foreclosure’ while in other secured loans, such as automobile loans, it is called ‘repossession.’ A rose by any other name is still a rose. In this case, you would probably change the old adage to “A thorn by any other name is still a thorn.”
It doesn’t matter what you call it, if you can’t complete the terms of the loan then you forfeit all equity you have built up over time in that property once your property has been foreclosed on or repossessed. It’s sad, but altogether too true.
Foreclosure
Because foreclosures are often filed against the borrower’s primary residence, there is Federal, State and Local laws set up to provide strict controls to protect the rights of consumers. Certain, very specific, conditions must be met before the lender can foreclose on a piece of real property. One condition that appears to be universal in all localities that there must be “notice to foreclose” published in local newspapers or other media.
Repossessions
When you have defaulted on paying back a vehicle loan, the lender has the right to seize your automobile the moment you are in default. Although there are very specific laws in every state that provide guidelines under which lenders can repossess vehicles, consumers are offered nowhere near the protection that they are afforded when pertaining to real property. Laws and guidelines do vary from state to state so if you are ever in this position you can learn your rights by contacting your state’s consumer protection agency.
Right of Redemption
In certain situations the mortgagor (borrower) has the right to recover mortgaged property from a foreclosure or judicial sale by paying the outstanding principal and interest due to the lender, plus any applicable court and other costs pursuant to filing. This is also pertinent in bankruptcy proceedings where the debtor has the right to buy back personal property seized in repossession by paying the lender market value. Guidelines and legislation vary from state to state.
Know Your Rights
Most of the time, you will find that lenders are only trying to protect their investments. Although there are some less than ethical lenders out there, most lenders just want to get their money back and make a profit above and beyond the principle they loaned out. However, there are unscrupulous lenders who prey off the misfortune of others.
There are laws that were set up to protect consumers against these fraudulent lending practices. You can find consumer advocacy groups on a national, statewide or local level that have been established to advise you of your rights.
If you have any questions, whatsoever, regarding foreclosure or repossession practices in your area you can find these groups online and many are listed in your local yellow pages.
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