How long is the Foreclosure process

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Hi all! I have a question about foreclosures. How long does it typically take a house to be listed on the market once a foreclosure deed is recorded? Is there a pretty standard time periods or does it all just vary?

For reference I am in alabama and the foreclosure feed was recorded December 2019. It was just listed on hubzu for auction last month but no one bid on the home. I’ve been trying to get information on the home to see when it will go to market but I have had no luck.

@Morgan Granger Everything depends on the lender that foreclosed on the property. If it was not sold during auction the lender will decide when and how to sell it. If you go to the County Clerk you can find out who the lender is. If it’s a small bank you may be able to contact them. You can also find out who the former owner is, if you are lucky they still live in the property and you can speak to them about buying it. Good luck!

@Morgan Granger It depends. If the bank purchased took it back at the auction eventually it will be listed as a REO. Could be month or years from what I've seen. Best thing to do is to monitor it. Is this one bank owned or was it purchased by a 3rd party? Contacting most large servicers to try to buy it prior to being listed as a REO won't be an option. If it's a small bank/servicer/private there may be a chance.

Redemption periods depend on state law. Appears Alabama has one. 

https://www.nolo.com/legal-enc...

Originally posted by @Morgan Granger :

@Jakob Kegel thank you. Would I still be able to buy it from the previous owner even if the bank has already acquired the foreclosure deed?


generally it depends who holds the lien - if it’s a big institution you can consider it impossible to get a property outside the regular auction once it’s in the foreclosure process.
But I would start by knocking on the door and speaking to the people living there, find out if their are the owners, see if their are interested to make a deal with you and get them to contact the lender. If it’s vacant find out who the lender is. Maybe you are lucky and it’s a small institution. 

 

@Morgan Granger Large institutions have processes that they follow once they foreclose on a property and there's no hurrying them up. It takes months or years for them to get through all of the tasks they need to complete before a real estate agent lists the property.

One of the things that take the most time is title. Title needs to be clear before they'll list the property. We avoid buying non performing notes in Alabama because of borrowers' post sale redemption rights. I'm not sure how banks handle that and suspect that the process might take longer because of that. 

@Morgan Granger

As Andy mentioned, Alabama has a redemption period of 3 years. What that means is that the borrower has 3 years to come back to the bank and pay the debt owed and all costs and they get the property back. If you were to buy it within the redemption period, the borrower Has the legal right to buy it back from you. You wouldn’t be able to renovate the property or place a tenant or move in until the redemption is over. 

Typically we offer a deed in lieu and also get a waiver of redemption signed by the borrower to avoid this. 

Originally posted by @Logan Hassinger :

@Morgan Granger

As Andy mentioned, Alabama has a redemption period of 3 years. What that means is that the borrower has 3 years to come back to the bank and pay the debt owed and all costs and they get the property back. If you were to buy it within the redemption period, the borrower Has the legal right to buy it back from you. You wouldn’t be able to renovate the property or place a tenant or move in until the redemption is over. 

Typically we offer a deed in lieu and also get a waiver of redemption signed by the borrower to avoid this. 

Redemption period for mortgages(homestead) prior to January 1, 2016 is one year, after January 1, 2016 is 6 months.  You can make improvements and if redeemed, redeemer would have to pay those costs paid for improvement.



 

@Morgan Granger , for mortgages executed on or after January 1, 2016 and for which a homestead exemption was claimed claimed during the tax year of the foreclosure, the redemption time period is 180 days. All others it is 1 year. If the property notices were not given, the 180-day redemption time period can be extended to one year.

Aside from issues related to the particular property foreclosed, lenders have differing needs that translate to different time periods before listing on MLS. Typically, a local or regional lender will offer properties for sale more quickly than a securitized trust or large national lender. For larger lenders, the real estate must be booked into the ORE department and a new appraisal ordered by that department. The pre-foreclosure appraisal will not be sufficient. A management company must be hired to secure the property and note the presence of any occupants. The property might be flagged for auction, or bulk sale to 3rd party investors. It can all take a lot of time.

@Denise Evans okay thanks you. I might have to read that a few times to grasp it. Also one of the odd things I noticed under the history of the property is it seems that it was listed for sale a month ago and then the listing was removed and then it was put on the hubzu auction site. Is that normal or why would they list it for a couple of month then remove it to auction?

@Denise Evans it was bought in December (I guess that is when the bank acquired it) then it was listed feb of 2020 and they kept dropping the price and just removed the listing the 7th of this month (I just missed it) and went to auction for a couple of days and no one bid on it. I just assumed since it was listed maybe they would put it back on the market sooner than later since they’ve already tried that once. Or if anything, I could find someone at the bank to talk to to make an offer

The length of the entire foreclosure process depends on state law and other factors, including whether negotiations are taking place between the lender and the borrower in an effort to stop the foreclosure. Overall, completing the foreclosure process can take from 6 months to more than a year.

Most of the foreclosures listed on Hubzu are CWCOT properties or the like. The bank is basically attempting to sell the property at a higher price to minimize their losses before collecting on the mortgage insurance and selling the property to HUD, VA or FNMA. The process could take a month or a year as there is no standard