There are many ways home borrowers facing foreclosure can avoid losing their homes. One legal concept is the right of redemption or the equity of redemption.
Equity of redemption
Mortgage borrowers in foreclosure have the right to ‘redeem’ their homes by paying off the total debt. Exercising this equity of redemption allows the borrower to buy back their home and stop a foreclosure. The “Redemption Period” is the specific time period during which one can do this.
Equitable right of redemption
No matter where you live in the U.S., you may redeem your property before the foreclosure sale. Some states also allow you to redeem after the foreclosure sale for a set period of time. The redemption period can vary depending on the state of the property, whether a particular state has classified it as recourse or non-recourse loan, and the redemption period for that state.
What does a Mortgage Redemption Cost?
You must pay off the entire mortgage debt plus interest and any other costs. The extra costs might include foreclosure fees and the like. This entire amount is due at the time of the redemption.
Foreclosure Redemption Period
Individual states set different time periods for mortgage redemption after a foreclosure sale. Some states give 30 days, and others up to 2 years. This can be affected by a number of factors: is the property abandoned? Did you waive your right to redemption? Did your foreclosure go through the court process? Who purchased your property during the foreclosure sale?
There are many factors to consider when determining your specific redemption period. Talking to a HUD-certified counselor from a HUD-approved housing counseling agency is a good place to start. A counselor can help you determine what laws apply to your situation and what your best course of action might be.