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Can I Get My Home Back After Foreclosure?
Clients frequently call our office to ask whether a foreclosure auction can be reversed. I often get asked, “Can I get my home back after foreclosure?”
The foreclosure rate across the Washington, D.C. metro area has dropped considerably since the housing bust. After peaking at 3.6% in January 2011, the foreclosure rate currently stands at 1.2%, which is a remarkable improvement. But the D.C. area’s foreclosure rate still remains higher than the national average, and Washington, D.C. has the fifth highest foreclosure rate amongst states in the nation.
The right of redemption following foreclosure
In many states, there is a time period during which you can “redeem” your home after foreclosure. In these states, the homeowner must pay the foreclosure purchaser the full price of the auction bid plus costs. Unfortunately, there is no right of redemption in Virginia, Maryland, or the District of Columbia. You cannot get your home back after foreclosure in the D.C. area.
In D.C., a property owner “may redeem the real property at any time until the foreclosure.” D.C. Code Ann. § 47–1360. In the District, the redemption period terminates when the foreclosure sale takes place. You cannot reverse a foreclosure auction in D.C.
In Maryland, foreclosures are nonjudicial. The sale, however, must be ratified by a court, which usually takes place 30 to 45 days following the auction. There is no right to redemption in Maryland pursuant to Md. Code Ann. § 7-101 and § 7-201 et seq., however as a practical matter, you may be able to redeem the property post-auction but prior to ratification of the foreclosure.
In Virginia, the right of redemption is contained in Virginia Code § 8.9A-623, which allows for a homeowner’s right to redeem the property “at any time before a secured party . . . has disposed of collateral or entered into a contract for its disposition.” The “secured party” in a foreclosure is the mortgage lender and the “contract for its disposition” is the foreclosure auction. Virginia has no right of redemption post-foreclosure. Virginia foreclosures are nonjudicial and conducted by “substitute trustees.”
Can I Get My Home Back After Foreclosure?
In the D.C. area, the answer is NO. If your home is sold at foreclosure auction, you will no longer own the property. That is why is it critical that you contact a knowledgeable bankruptcy attorney immediately when you receive notice of foreclosure sale. A notice of foreclosure may be mailed to you at the property address. Or you may be personally served by a process server. To make matters worse, in addition to losing your home, you may be sued post-foreclosure for a “deficiency judgment” which is the amount due the mortgage lender when the mortgage debt exceeds the foreclosure sale price.
The bottom line? If you intend to keep your home, you must take action before the foreclosure sale happens. Foreclosures in the Washington, D.C. area can happen fast, so it is absolutely essential that you work quickly to explore your options before you run out of time.
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