Redemption period: A time period during foreclosure in which homeowners can buy back their property.
Redemption period: A period of time after the foreclosure sale when the homeowner can regain possession of their property by paying the foreclosure sale price, plus interest and other allowable fees, to the foreclosure sale purchaser, which is in many cases the bank itself.
Redemption Period: One Last Chance to Buy Back Your Home
During the redemption period, a homeowner is allowed to pay off their outstanding mortgage debt and buy back their property. The redemption period can either specified before the foreclosure sale, or after, depending on state law.
Homeowners who wish to buy back their property during the redemption period are expected to pay off the total outstanding debt, including the principal balance, as well as additional costs and interest, prior to the sale to stop the foreclosure, or pay off the purchase price, as well as costs and interest, after the foreclosure sale in order to repossess the property.
All states allow homeowners to redeem their property before the foreclosure sale, though only select states afford a redemption period after the foreclosure sale.
Understandably, redemption prior to the foreclosure sale is rare since most homeowners default due to lack of liquidity. The right to redeem the property after the foreclosure sale, known as a statutory right of redemption, is established by each state.
Some states also allow courts to impose a redemption period. Maine, for example, “allows borrowers to challenge the legality of foreclosure in court. If the court rules in favor of the lender, then the borrower has a three-month redemption period to stop the action in order to come up with the money. Maine’s Foreclosure Diversion Program also provides for mediation between lenders and borrowers in foreclosure, with the goal of working out a repayment plan that works for both parties.”
In California, court proceedings also prolong the redemption period.
“When property is sold subject to redemption, the purchaser pays the amount due the levying officer conducting the sale, and the officer is required to execute and deliver a “certificate of sale” to the purchaser. The certificate of sale contains the price paid for each parcel that is subject to redemption, the total price paid, a statement that the property is sold subject to the right of redemption, and the applicable redemption period.
“The person redeeming must deposit the “redemption price” with the levying officer prior to the expiration of the redemption period. The redemption price is the total of the purchase price at the sale,
the amount of assessments or taxes, and reasonable sums for fire insurance premiums and maintenance expenses, paid by the purchaser, any amounts paid on account of senior liens to the extent necessary to protect the purchaser’s interest, any liens held by the purchaser that were junior to the lien foreclosed, and interest on the above sums at the legal rate.
“When the purchaser and the person seeking to redeem disagree on the amount of the redemption price, or the capacity of the person to redeem, or if the purchaser rejects the tender of the redemption price, the person seeking to redeem can file a petition with the court prior to the expiration of the redemption period, together with a deposit with the court of the amount tendered. The petition is heard by the court within 20 days after it is filed, and it must be served on the purchaser, together with a notice of the hearing date and time, at least 10 days prior to the date of the hearing. If the court determines that an additional sum is required for the redemption, the additional sum must be paid to the levying officer within 10 days after the order,” according to Sacramento attorney James J. Falcone.