Investor · Alamogordo, NM · Member since 2012 · 38 posts · 15 votes
I'm trying to find someone with knowledge about the Right of Redemption in a judicial foreclosure state (I live in New Mexico). I would like to better understand the process of buying the right of redemption. I've had several foreclosure deals lately that were expected to come to market but an investor purchased the right of redemption and subsequently was able to secure owning the house before the property was listed on the open market as a foreclosure sale. I'd appreciate anyone with knowledge on this process allowing me to ask questions.
@Nick Paul great question and I am glad you posted it! I have purchased several redemption rights deals. They can be pretty sticky in NM, but also profitable.
Here is the quick and dirty rundown of how it goes in NM:
Seller gets foreclosed on gets a notice of lis pendens
House gets sold at auction (usually on the county courthouse steps)
Special Master Submits Report
Judge approves sale (this is when the clock starts for the redemption period)
Property owner has the right to redeem the property for 30 days (or assign their rights)
There are a ton of nuances and ways to get burned (I.E. Owner selling redemption rights to 2 people OR shady operators forging docs). Luckily, my wife is an Attorney and has helped me work through a lot of the major problems.
Feel free to reach out and I can give you some more clarification.
I have done dozens of these deals. For your first few, I would recommend finding an attorney to walk you through the process. They can make sure you have the right paperwork in place, meet deadlines, etc.
@Neil Lambert Depending on how you redeem, you may be able to skip step 5.
For step 6 - we generally do 2 documents an Assignment of Redemption and an agreement. The assignment is what gets recorded, the agreement spells out the terms of the deal.
For step 7, from the date of auction you are at a minimum 2 months from getting the deed. I have seen it take much longer. Typical is 4-6 months.
I did a presentation on this, send me a message and I will send you my slide deck.
@Nick Paul - you might try Mark Rickert and Dave Torres. They are both in the Albuquerque / Rio Rancho area and are pretty knowledgeable. They are both on this site as well.
As I understand it, in New Mexico the person being foreclosed on has a period of time to redeem the property by paying off the loan balance. They can sell this right of redemption to a third party so that the third party can pay off the loan and take possession of the property even if it has been sold at auction, as long as the property is within the redemption period.
I believe, but I am not certain, that the mortgage holder can sell the right of redemption at any point before the right expires.
That is correct which would be 9-months. To pay the lien.
I'm trying to find someone with knowledge about the Right of Redemption in a judicial foreclosure state (I live in New Mexico). I would like to better understand the process of buying the right of redemption. I've had several foreclosure deals lately that were expected to come to market but an investor purchased the right of redemption and subsequently was able to secure owning the house before the property was listed on the open market as a foreclosure sale. I'd appreciate anyone with knowledge on this process allowing me to ask questions.
Thanks!
What you're talking about is called subject to. Which is a great way to get a property. You take over the mortgage payments. Of course you'll be paying the taxes.
Oh one more thing, the owner can stay in the property and continue to live there. they just come your tenants. I know a person that has acquired many properties this way.
I have done dozens of these deals. For your first few, I would recommend finding an attorney to walk you through the process. They can make sure you have the right paperwork in place, meet deadlines, etc.
@Neil Lambert Depending on how you redeem, you may be able to skip step 5.
For step 6 - we generally do 2 documents an Assignment of Redemption and an agreement. The assignment is what gets recorded, the agreement spells out the terms of the deal.
For step 7, from the date of auction you are at a minimum 2 months from getting the deed. I have seen it take much longer. Typical is 4-6 months.
I did a presentation on this, send me a message and I will send you my slide deck.
Hello David, I would be interested in seeing your slides on this topic. Thanks, Laurée
I have a question about the individual who deeds the house to someone who purchases the redemption rights. The case in point is in regards to someone who was Willed a property, but was unable to pay a reverse mortgage off. As a result the property has gone into foreclosure. An investor has approached the individual about purchasing redemption rights to the property. My question, is the money that is paid for redemption rights to the property considered an asset to the estate of an individual who has passed away?
David - why do you ask the question? This is one for an attorney.
Hello David, If this property has a reverse mortgage then if the owner dies the reverse mortgage has to be paid off within a time frame by the reverse mortgage. Or else it will go into foreclosure. I've done many probates and reverse mortgagors want to be paid! So it looks like we have two things here to think about besides the redemption rights.