If you are facing a foreclosure on your home, you should be aware that you have certain rights as a homeowner. One of these rights is the right to redemption, which is a period in which you can redeem (or buy back) your home. You can redeem your home at any point before the foreclosure sale, and you even may be able to buy back your home for a limited period after the foreclosure sale. The right of redemption after foreclosure is only available in some states.
As a practical matter, redemption before the foreclosure sale is relatively uncommon because a homeowner who was unable to keep up with loan payments probably will not suddenly have the resources to pay off the entire debt plus interest and fees. Redemption after the foreclosure sale may be more feasible because it allows more time for the homeowner’s financial situation to improve.
Redemption Before the Foreclosure Sale
Whether redemption occurs before or after the foreclosure sale determines the way that the cost of redemption is calculated. Redemption before the sale involves paying back all of the debt that you owe on the loan. This includes not only the total balance that you owe on the principal but also the interest that has accumulated and any additional costs. For example, you might need to pay back penalty fees that were assessed because of late payments.
If you are trying to redeem your home before the sale, you should calculate the full amount that you need to pay by getting a payoff letter or statement from the mortgage servicer. You may find charges in this statement that you did not expect or with which you do not agree. Sometimes mortgage servicers make mistakes or even engage in abusive practices. You have a right to point out an error and get it corrected, although your time may be limited if the foreclosure sale is looming.
Redemption before a foreclosure sale is based on equitable principles rather than statutes. The idea is that a homeowner should have every possible opportunity to keep their home despite failing to pay off the mortgage. The right lasts throughout the entire period between the acceleration of the promissory note and the sale.
Redemption After the Foreclosure Sale
Redemption after the sale may involve reimbursing the purchaser of the home for the purchase price, or it may involve paying back the full amount owed on the mortgage in addition to interest and fees. In contrast to the right of redemption before the sale, the right of redemption after the sale is based on statutes rather than equity. You can ask a foreclosure attorney about whether your state provides a right of redemption after the sale.
Even if you will not be able to redeem your home after the sale, a post-sale right of redemption can be helpful. It may allow you to stay in the home as long as the redemption period lasts. This can give you time to find your next home and plan your move, reducing stress during the foreclosure process.