If you don’t make your mortgage payments, the loan owner (called the "bank" in this article) can sell your home at a foreclosure sale and use the proceeds to repay the debt. But you might be able to get your property back if you lose it this way. Some states allow a foreclosed homeowner to repurchase the property following a foreclosure during a redemption period.
A "redemption period" is a specific amount of time after a foreclosure sale, ranging from several days to a year, depending on state law, during which a foreclosed homeowner can buy their home back. About half the states provide a redemption period to foreclosed homeowners.
How Long Is the Redemption Period?
The length of the redemption period, if state law provides one, varies from one state to another.
State law also regularly provides different redemption periods depending on the situation. The redemption period might be:
- longer if the bank gets a deficiency judgment as part of the foreclosure
- one length for nonjudicial foreclosures and another length for judicial foreclosures
- based on how much of the mortgage loan the borrower has already paid off
- reduced if the homeowner moves out of the home before the foreclosure ends, or
- longer if the bank instead of a third party buys the home at the foreclosure sale.
How Do I Redeem the Property?
State law also sets out how much it costs to redeem the home and the procedures for redeeming.
Cost to Redeem Your Home After a Foreclosure
Generally, a foreclosed homeowner has to pay either:
- the price that the buyer at the foreclosure sale paid, plus interest and certain expenses like HOA fees and property taxes, or
- the total mortgage debt, plus interest and expenses.
How to Redeem Your Home After a Foreclosure
To redeem the property, a foreclosed homeowner usually has to give a written notice of redemption to:
- whoever bought the home at the foreclosure sale and
- the court or other party that held the foreclosure sale.
Then, the former homeowner has to pay the redemption amount to the buyer, court, or another party. State law describes what information must go in the notice of redemption and which party gets the redemption money.
Saving Your Home From Foreclosure Before the Sale
Unfortunately, most homeowners who’ve gone through a foreclosure aren’t able to raise enough money to redeem the property afterward. Keep in mind that most banks offer foreclosure avoidance options, like modifications, including Flex Modifications, to borrowers who are struggling to make their mortgage payments. But, usually, you must apply for help well in advance of the foreclosure sale.
Under federal law, if you submit a complete loss mitigation application more than 37 days before a foreclosure sale, the servicer can’t move for a foreclosure judgment or order of sale, or conduct a foreclosure sale, until it reviews the application and:
- lets you know that you don’t qualify for a foreclosure alternative (and your time to appeal that decision expires)
- you turn down the loss mitigation option that the servicer offers you, or
- you agree to the loss mitigation option that the servicer provides, but you fail to live up to the terms of the deal, like you don’t make the required payments during a trial modification.
Getting Help
For specific information about the redemption period in your state and situation, consult with a local foreclosure attorney. If you need information about different ways to avoid a foreclosure sale, consider talking to a HUD-approved housing counselor.