In California, you might be able to repurchase or "redeem" your home after losing it in a foreclosure, but only under specific circumstances. Whether you can redeem your home depends primarily on whether the foreclosure was nonjudicial or judicial. In a nutshell, here are the rules:
To determine whether you can redeem your home after a judicial foreclosure in California, you must first understand the concept of a "deficiency." After a foreclosure sale, the total debt that the homeowner owes sometimes exceeds the foreclosure sale price. The difference between the sale price and the total debt is called a "deficiency."
Example. Say you owe the lender $650,000, but the property sells for $600,000 at the foreclosure sale. The deficiency is $50,000.
In some states and under certain circumstances, the lender can seek a personal judgment, called a "deficiency 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 using regular collection methods like garnishing wages or levying a bank account.
If the foreclosure is judicial, you may generally redeem the home within:
But if the sale results in a deficiency and the lender waives a 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)). For example, under California law, even if the lender uses a judicial foreclosure process, deficiency judgments aren't allowed in cases where the loan was:
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).
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:
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. At the time you file the petition, 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. Be sure to file the petition and complete the redemption before the redemption period expires. (Cal. Civ. Code Proc. § 729.070).
Once you redeem, the levying officer will deliver the funds to the purchaser and promptly give a certificate of redemption to you, giving you the right to keep the home. (Cal. Civ. Code Proc. § 729.080).
If you want to keep your home, it's usually better to take action before the foreclosure sale. By acting early, you'll likely have access to more options to save the property, like:
To get information about California foreclosure procedures, possible defenses to a foreclosure, or the procedures for redeeming the home after a foreclosure (if you get that right), consider talking to a local foreclosure lawyer.