Without getting too much into the weeds of my family, a couple of relatives just lost a house-- “out of the blue” according to them, but they’re not telling the whole story, and their lack of honesty really screwed another family member who was renting the house from them.
Anyway, after doing a bit of Internet research, the home comes up as “repossessed.” I’ve never heard of this. Is this the same as a foreclosure?
Any real estate legal experts have anything on this? I’d even settle for a real estate legal “expert.”
Foreclosure is the process of the bank recuperating an outstanding balance on a mortgage. This may end in repossession, a short sale, or some other negotiated settlement. If it is coming up as repossessed, it probably means that the foreclosure process is finished, and the bank is now the legal owner of the property. If you give us the state, we can find exactly what it means.
No. Foreclosure refers to the lender ending the terms of the loan, for various forms of noncompliance with the contract by the borrower, most often failure to make payments but also other defaults such as not maintaining insurance on the property. The lender may attempt to confiscate and sell the security (property), but this is a consequence of foreclosure, not a part of it per se. A borrower can satisfy foreclosure by other means, including shooting the banker. No wait, that probably wouldn’t work.
Thus, a “repossessed” house is one which had indeed been sold as collateral for a defaulted loan. A house “in foreclosure” is one where that hasn’t happened yet, but probably will.
I’ll bet the other family member is not nearly as screwed as it may initially seem. They have very specific rights under the Protecting Tenants at Foreclosure Act of 2009. If they just feel cheated because they don’t get to live there forever without ever moving again they should look into purchasing a home instead of renting.
You didn’t furnish the jurisdiction, but in all US states that I am aware of, when real estate is foreclosed, the property is sold at public auction. This is pursuant to a legal action brought in court, and all necessary parties must be notified. After the sale, a certificate of sale is issued to the purchaser (who, in most cases, is the mortgagee [lender]). The owner, or any necessary party (i.e., those others having liens or other interests in the property) has a certain period to redeem before a deed is issued. The redemption price is the purchase price plus interest at the amount allowed by statute. If the mortgagee is the purchaser, the price would be the outstanding principal on the mortgage. Real estate is not “repossessed,” but foreclosed; only personal property can be repossessed. Actually, the lender can never reposess real estate because it never was in possession. And after foreclosure and after the period of redemption expires, and after a deed is issued, the lender does not possess the property. It is the legal owner, but it will offer the property up for sale. It is not in the business of posessing real estate other than that used for its business.
No they got pretty screwed, but thanks.
Thanks for your answers everyone. This is a case where this house is indeed listed on multiple websites as a “REO repossession.” The jurisdiction is MI, fyi.
Was this by chance a manufactured or mobile home?
repossession - is simply the taking back of property by the lender. Cars, furniture, appliances can be repossessed if they were bought on credit. Houses are the same. They are owned by the bank until the loan/mortgage is paid off.
Foreclosure - is the process where a house mortgage is unpaid and the lender/bank demands payment & penalties. If the loan is terminated then the entire balance of the loan becomes due. At some point the bank seizes the property and can sell it to satisfy the unpaid loan.
No it was a regular brick and mortar home.
No. The property is not owned by the bank. The bank has a lien which can be foreclosed. Foreclosure requires a judicial proceeding. States differ as to the specifics. In some states a type mortgage called a trust deed does give the bank legal title but the borrower has equitable title which still must be foreclosed.