I bought a home in California six years ago with an adjustable rate mortgage (ARM). When the mortgage payment reset last year, I couldn't afford it. I just lost the home through foreclosure, but my aunt recently died and I expect to get some money from her will. Can I get my home back even though the foreclosure sale already took place?
You may be able to get your home back after the foreclosure sale, but it’s unlikely. In California, you can repurchase or “redeem” your home after losing it in foreclosure, but only under certain circumstances. If yours is similar to most California foreclosures, you probably won’t meet the criteria for redemption.
Your Right to Redeem in a Nutshell
Whether you can redeem your home depends on whether the foreclosure was nonjudicial (where the foreclosure takes place without court supervision) or judicial (where the lender files a lawsuit in court to foreclose your home). In a nutshell, here are the rules:
Nonjudicial foreclosure. If the foreclosure was nonjudicial, you can’t redeem the home afterwards.
Judicial foreclosure. If the foreclosure was judicial, you can redeem your home either:
- within three months if the sale proceeds were enough to cover your mortgage debt, or
- within one year if the sale proceeds are not enough to cover your mortgage debt, but not if a deficiency judgment is waived or prohibited. (We explain these rules in more detail below.)
The vast majority of residential foreclosures in California are nonjudicial, which means those foreclosed homeowners cannot get their homes back after the sale.
When You Can Get Your Home Back After a Judicial Foreclosure in California
To determine whether or not you can get your home back after a judicial foreclosure in California, you must first understand the concept of a “deficiency.”
Understanding deficiency judgments. When a lender forecloses on a mortgage, the total debt that the homeowner owes to the foreclosing lender is often greater than the foreclosure sale price. The difference between the sale price and the total debt is called a deficiency. For example, say the total debt owed on the first mortgage is $200,000, but the home only sells for $150,000 at the foreclosure sale. The deficiency is $50,000.
In some states and under certain circumstances, the lender can seek a personal judgment against the borrower to recover the deficiency. Generally, once the lender gets a deficiency judgment, it may collect this amount (in our example, $50,000) from the borrower by doing such things as garnishing wages or levying a bank account.
The right to redeem after a judicial foreclosure. If the foreclosure is judicial, you can redeem the home within:
- three months after the foreclosure sale, if there wasn’t a deficiency, or
- one year, if there was a deficiency (Cal. Civ. Code Proc. § 729.030.)
If you don’t redeem the home within this time frame (called the redemption period), your right to redeem expires. After that, you won’t have another opportunity to get your house back. (Learn more general information about the right of redemption.)
Exception to the rule. If there is a deficiency, but the lender waives the deficiency judgment or California law prohibits a deficiency judgment in your situation, you don’t get a redemption period (Cal. Civ. Code Proc. § 726(e)). (Learn more about when the lender cannot pursue a deficiency judgment in Nolo’s article Deficiency Judgments After Foreclosure in California.)
How Will You Know If You Have a Right to Redeem?
If you get a redemption period after the sale, the levying officer who conducted the sale will deliver a notice to you, either personally or by mail. The notice will indicate the length of the redemption period (Cal. Civ. Code Proc. § 729.050).
How Much You'll Have to Pay to Get Your Home Back
In order to redeem, you must reimburse the purchaser (the person or entity who bought it at the foreclosure sale) for the full price paid at the sale, plus all lawful charges such as:
- the amount of any assessments or taxes
- reasonable amounts for fire insurance, maintenance, upkeep, and repairs
- the amount of any prior liens that the purchaser paid, and
- interest (Cal. Civ. Code Proc. § 729.060.)
How to Redeem Your Home After a Judicial Foreclosure
To find out the exact cost to redeem, contact the purchaser. Then you must pay the redemption amount to the levying officer who conducted the sale (Cal. Civ. Code Proc. § 729.060).
If you and the purchaser disagree on the redemption amount (or if the purchaser refuses to give you a redemption price), you may file a petition with the court for an order determining the amount due (Cal. Civ. Code Proc. § 729.070.) (Be sure to file the petition before the redemption period expires.) At the time the petition is filed, you must deposit the undisputed amount of the redemption price with the levying officer. The court will then determine the amount required to redeem the home.
Once you redeem, the levying officer will deliver the funds to the purchaser and then promptly give a certificate of redemption to you, giving you the right to remain in the home (Cal. Civ. Code Proc. § 729.080). (You get to live in the home during the redemption period) (Cal. Civ. Code Proc. § 729.090).
If Possible, Don’t Wait Until After the Foreclosure to Save Your Home
In most cases if you want to keep your home, it is better to take action before the foreclosure sale. This will give you more options to save the property. For example, you could:
- pay off the past-due amounts to reinstate (catch up on) the loan, or
- try to work out an alternative to foreclosure that will allow you to keep the property, such as a mortgage modification, forbearance agreement, or repayment plan.
Finding California’s Redemption Laws
To find the statutes that discuss your right to redeem the home after a judicial foreclosure in California, go to §§ 729.010 to 729.090 of the California Code of Civil Procedure.