After the foreclosure is complete, meaning that there has been an auction or sheriff's sale to sell your house to the highest bidder, then people commonly wonder "what next". At this point, one of two things has happened. One, your house sold to a bidder at the auction and they are the new owner OR there was no bidder that the bank now owns your house.
In either case, the process is about the same depending on redemption periods within your state. (FYI, a redemption period is a section of time allowed by law for you to pay the lender what you owe them in order to keep your house. In some states, this redemption period with fall after the auction)
Here is a general peak at what can happen after a foreclosure, just bare in mind that this varies depending on the state you live in:
If you are in the house after the house has been auctioned, then the new owner (or the bank if there was no bidder) will have to go through a legal process to evict you. The eviction process can take 5 days to 90 days depending on your state law. You will not be dumped on the street without notification. The sheriff's department will serve you notice of the eviction and in that notice will be instructions on your rights and the time frame to get out.
If you want more details on the eviction process, then you will need to call the small claims courts in your local courthouse. Ask about how the eviction process works in order to understand exactly how many days you will have to leave the house after the auction. They are very helpful and sometimes even have pamphlets available to the public regarding evictions.
NOTE: It is important to note here that if you are in a state with redemption rights after the auction. Then the eviction will not start until after the redemption period is over.
An eviction will only take place if ownership is transferred out of your name after the auction. Each mortgage can foreclose individually. If it is the second mortgage that goes to auction, then the property ownership does not transfer to the highest bidder or the lender. All that was bought at the auction is the mortgage or lien on the property. The only way property ownership can transfer at the auction is if the first mortgage foreclosed. In most states, if the second/third mortgage goes to auction and your first mortgage has not, they cannot evict you as the first mortgage has precedence.
THE REDEMPTION PERIOD
A redemption period is an amount of time that allows the homeowner the opportunity to stop the foreclosure by paying the entire loan amount off. Only some states have a redemption period, Wyoming is one of them. This normally starts after the auction and in Wyoming it runs for 3 months. A redemption period is a timeframe in which you can sell your house (or use another means to pay the entire loan amount off) and get out or the foreclosure that has already taken place. During this time, you cannot be evicted and you don't have to make any house payments. It is just a period of time allowed by state law to redeem you in the situation.
In Judicial States, the redemption period could be before the auction date. This issue will come up at your court date stated in the Complaint. You can ask the judge, the attorney, or the lender about your redemption rights. But again, redemption rights are still only rights to pay the entire loan off in full.
Not all states have redemption rights.
A DEFICIENCY JUDGMENT
In some cases, the lender is not able to sell your house at the auction for the full amount you owed on the mortgage/loan. When this happens, the lender can seek what is called a deficiency judgment in order to recover the rest of that money owed. This is done through the court system so you will get notice if this happens and a summons to appear in court. Not all lenders seek a deficiency judgment and even if it is allowed in your state, the lender may or may not choose to seek one after the auction.
Once the court has allowed a judgment for the lender to recover the deficient amount, then just like with any judgment, they may attempt to garnish your wages or take your assets to pay for the debt.
In Judicial States, when the initial Complaint is filed to initiate the foreclosure process, the lender can also file for an automatic deficiency judgment in the event that the auction doesn't bring the full amount owed on the mortgage. You will need to listen for this during your court appearance if you choose to go. The court case is also public knowledge, so you can ask for the details of the court case after the court date has passed directly from the courthouse or you can go down to the recorder's office and print off a copy of the writ of execution to take home and read.
Not all states allow a deficiency judgment. Again, each state is different and therefore what happens after foreclosure will vary as well.
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