Buyers of foreclosed properties and
homeowners who are facing foreclosure should be aware of foreclosure redemption
rights in Rhode Island. Since Rhode Island is a non-judicial (e.g., no court
proceedings) foreclosure state, there are only certain circumstances that allow
a homeowner to exercise their rights of redemption.
What are redemption rights?
Rights of redemption are rights provided
to a homeowner who has gone through the foreclosure process. These rights are
typically laid out in state statutes and allow the borrower to pay the full
balance of the outstanding loan plus certain costs to the lender within a
specified period of time. Borrowers who are able to exercise these rights are
able to reclaim their home, even if it has been sold at a foreclosure auction.
What does Rhode Island allow?
Foreclosure cases in Rhode Island that
are handled through a non-judicial process do not have any redemption rights.
This means that the borrower cannot exercise any rights once the property has
been sold to another buyer. Generally, most foreclosures are complete within 60
to 80 days.
When can a Rhode Island homeowner
exercise their rights?
Foreclosures contested by the homeowner
become judicial foreclosures. In these cases, the court becomes involved and
gives the go-ahead to the lender to proceed with the foreclosure. For buyers of
foreclosed properties however, this process is fraught with danger. Homeowners
who have lost their home through
the judicial foreclosure process may exercise their rights of redemption for up to three years. For the buyer of a foreclosed property, this means they could theoretically own the property for up to three years and the original homeowner may reclaim the property.
the judicial foreclosure process may exercise their rights of redemption for up to three years. For the buyer of a foreclosed property, this means they could theoretically own the property for up to three years and the original homeowner may reclaim the property.
Why
would a borrower contest a foreclosure?
Borrowers may contest foreclosures
for any number of reasons. Some of the primary reasons for contesting a
foreclosure include (a) the borrower feels they will be able to get back on
track with their mortgage (they may file bankruptcy in this case) or, (b) they may
feel that because of the robo-signing
scandal the lender may not be able to prove they are the rightful
mortgage holder.
Rhode Island
Statutes Title 34 govern all foreclosures in the state. These statutes
clearly explain the rights of the borrower and the responsibilities of both
borrower and lender. Homeowners should also be aware that in the event that
their home is foreclosed that Rhode Island law provides that the lender may
file a deficiency
judgment. This means that even if the home is foreclosed, the borrower may
still be on the hook for additional funds in the event the foreclosure sale
does not cover the full amount of their unpaid mortgage.
Homeowner's need to be able to protect
themselves from fraudulent foreclosures, especially if there is a doubt as to
the validity of the original mortgage or the rights of the lender to foreclose.
While most Rhode Island foreclosures do not result in the homeowner having
redemption rights, some do. For those homeowners who have foreclosure
redemption rights in Rhode Island an attorney should be contacted for
assistance. When purchasing a home at a foreclosure auction, it is a good
idea to find out if the home was obtained through the judicial or non-judicial
foreclosure process to avoid potentially losing the home if the original owner
has redemption rights.