If your home was recently sold in a foreclosure sale, but you haven’t yet moved out (or if you’re currently going through a foreclosure), you might want to know what happens next. Some homeowners quickly leave the home after the home is sold. However, depending on your circumstances and your state’s laws, you might have other options to either stay in the home for a longer period of time, get money to move out sooner, or even buy back the home.
Some states permit a foreclosed homeowner to buy back the home within a certain period of time after the sale. This is called a redemption period. To redeem the home, you usually have to pay the total purchase price, plus interest, and any allowable costs, to the purchaser who bought it at the foreclosure sale. In some states, though, you'll have to pay the total amount owed on the mortgage loan, plus interest and expenses. (Learn more general information about the right of redemption.)
The deadline and procedures for exercising a right of redemption varies from state to state, and not all states provide a redemption period after the sale. (To find out whether your state has a redemption period after the foreclosure, see Key Aspects of State Foreclosure Law: 50-State Chart.)
In order to redeem, the former homeowner has to come up with another source of financing. But getting a bank to lend you money after a foreclosure can be very difficult, even if you have a steady income, because your credit score will have taken a bit hit. (Learn how a foreclosure affects your credit score.)
Some special programs are available to help homeowners in this type of situation. For example, a program called Stabilizing Urban Neighborhoods (SUN) offered by a nonprofit organization helps foreclosed homeowners in Massachusetts, Maryland, Rhode Island, New Jersey, Illinois, Connecticut, and Pennsylvania by purchasing foreclosed properties and then reselling those properties back to the former homeowners, usually at current fair market value, with a new, fixed-rate 30-year mortgage. (Learn more about the SUN Initiative.)
If your state provides a redemption period after the sale, you sometimes have the right to live in the home payment-free during this time. For example, in Michigan, most homeowners get a six-month redemption period (some people get a year) during which time they can live in the home. (Under some circumstances, though, like if the foreclosed homeowner unreasonably refuses to allow the purchaser to inspect the home, the purchaser can begin an eviction sooner. Read more about redemption periods in Michigan.)
By staying in the home during the redemption period, you can save money by living rent-free. This way you can use the money that you otherwise would have spent on housing to pay other bills and start rebuilding your credit. (To learn more about your rights during the redemption period in your state, if there is one, consider talking to a local foreclosure attorney.)
In some cases, you might be able to remain in the home as a tenant after the foreclosure sale. For example, Freddie Mac offers a program that allows recently foreclosed homeowners to rent their home on a month-to-month basis, if Freddie Mac acquires the property as a result of foreclosure. (You can learn more about this program, called the Freddie Mac REO Rental Initiative, at the Freddie Mac website. If you want to find out if Freddie Mac owns your loan, go to www.freddiemac.com/mymortgage or call 800-Freddie.)
If you don’t move out after the purchaser gets title to the home (typically either after the sale or after the redemption period), the new owner (often the foreclosing party) will start eviction proceedings to remove you from the property. The length and procedures for the eviction process varies from state to state. In some cases, the foreclosing party can include the eviction as part of the foreclosure action—depending on your state's law and the circumstances of your case—while in other instances, it will have to file a separate eviction action with the court.
You might receive a notice prior to the start of the eviction (called a Notice to Quit), which gives you a certain amount of time—for example, three days—to leave the home before the eviction officially starts. While you can stay in the home until you’re forcibly removed through the eviction process, it is generally best to leave the property before this time period expires. (You can learn more about eviction after foreclosure in Foreclosure Timeline: Getting Notice to Leave.)
To avoid having to complete an eviction, the purchaser might offer you a “cash for keys” deal. With this arrangement, you agree to leave the home by a certain date, and in good condition. In exchange, the purchaser gives you a specified amount of cash to help pay for your relocation costs.
You can request a cash-for-keys agreement if the purchaser doesn’t offer you one.