Fannie Mae announced on May 27th 2010 that it will no longer purchase loans on bank owned foreclosed properties with a “Right of Redemption”.
- What is the “Statutory Right of Redemption”?
The Statutory right of redemption is the legal right afforded to foreclosed borrowers that gives them the right AFTER the foreclosure to reclaim the property for up to a year after they lost in a foreclosure. To exercise this right, they would need to catch up on all defaulted amounts including past payments, penalties, attorney fees, and other costs and fees associated with the foreclosure.
- Washington State has NO redemption period for non-judicial foreclosures.
How will this affect me in purchasing a home?
- This is actually favorable for our state because we are a Deed of Trust state which NORMALLY does not involve a court action (Non-judicial foreclosure).
- Washington State DOES however have a 1 year statutory redemption period for a Judicial Foreclosure.
- Point is… if you’re looking at a JUDICIALLY FORECLOSED HOME … FNMA (Fannie Mae) Will NOT purchase the loan until AFTER the 1 year redemption period has passed… meaning the lender would have had to foreclose on the property a minimum of 1 year ago.
(Judicial foreclosure is a type of foreclosure proceeding that is conducted as a court proceeding. This is the “typical” process used to foreclose on homes which are using a “MORTGAGE” rather than a deed of trust to secure the debt of the underlying loan on the property. )
This information is for educational purposes only and should not be construed as legal advice; please consult an attorney for detailed advice and definitions of the terms used above. To ensure you are purchasing a home with no hidden agreements consult your real estate professional or one of the Premier Realtors on the Real Estate Reel.
