I recently accepted a new a job in Oklahoma and want to buy a house there, but I don’t really like anything that is currently for sale. I’m wondering if it would it be a good idea for me to buy a home through a foreclosure sale. I don’t know much about how to do this and heard there can be a lot of problems with purchasing a home this way. For example, is it true that in Oklahoma the homeowners could get the house back even after the foreclosure sale? Some websites say they can while others indicate that they cannot. Which is correct?
Technically, foreclosed homeowners in Oklahoma cannot get the house back after the foreclosure is completed. However, there is a small window of time between when you buy the home at the foreclosure sale and when the court finalizes the sale during which they could reclaim the home by “redeeming” it. (This means paying off the full amount of the mortgage debt plus certain additional amounts.)
Redemption is typically not a problem for potential Oklahoma buyers like you, since the foreclosed homeowners would have to come up with a significant amount of money within a very short time period in order to redeem.
The vast majority of residential foreclosures in Oklahoma are conducted by a procedure known as "judicial." This means the lender files a lawsuit in state court in order to foreclose the home after the homeowners stop making their monthly mortgage payments. As part of the process, the court will enter a judgment and order that the property be sold to pay off the debt.
After you buy the home at the foreclosure sale, the court must confirm (approve) the sale. This typically occurs somewhere around two weeks later. The foreclosed homeowners could redeem the home during this time. However, once the sale is confirmed, the homeowners forever lose the chance to get the home back by redeeming it.
In order to redeem the house, the foreclosed homeowners would have to pay the full amount of the mortgage debt, plus all expenses, including foreclosure costs and fees.
For obvious reasons, homeowners usually aren’t able to redeem. After all, homeowners who could not keep up with their monthly mortgage payments would have to come up enough money to pay off the full amount of the mortgage debt very quickly after the sale. Most foreclosed homeowners aren’t able to find financing for this.
Though it doesn’t happen too often, the IRS may redeem the property after the sale if there was an IRS Notice of Federal Tax Lien on record at the time of the foreclosure. By law, the IRS has a period of 120 days from the sale date in which to redeem. To redeem, the IRS would have to pay you:
It’s not particularly common for the IRS to redeem. However, if the IRS does consider redeeming the home, you’ll get a notice ahead of time letting you know its intentions.
While redemption usually doesn’t happen in Oklahoma, there are several other issues to consider if you're thinking of buying a home at a foreclosure sale.
Foreclosed homes often look good from the outside, but are seriously damaged inside. This is because owners who couldn't pay the mortgage most likely couldn't afford basic upkeep, either. In addition, homeowners going through a foreclosure sometimes take out their frustration on their homes. This can be a problem for you, because you’ll be buying the home “as is” at the foreclosure sale and won’t be able to negotiate over any repairs. (Learn more in Nolo’s Buying Foreclosed Properties area.)
To find the statutes that discuss redemption rights in Oklahoma, go to Title 42 and Title 46 of the Oklahoma Statutes.