A redemption period is a specific amount of time given to borrowers in foreclosure during which they can pay off the debt and “redeem” their property. All states allow a borrower to redeem the property before a foreclosure sale. Some states also provide foreclosed borrowers with a redemption period after the foreclosure sale during which they can buy back the home.
"Redeeming" the home can refer to either of the following situations:
Again, in all states, the borrower can redeem the home before the foreclosure sale; but only certain states provide a redemption period following the foreclosure sale.
One way to avoid a foreclosure is by redeeming the property prior to the foreclosure sale. This right is an equitable principle based upon the idea that borrowers should be given one last chance to keep their home, even if they have defaulted on mortgage payments.
Cost to redeem. To redeem before the sale, you must first find out the exact amount needed to satisfy the debt. So, you should request a payoff quote, which is also sometimes called a payoff letter or payoff statement, from the servicer. (Learn more about the process for paying off a mortgage loan before a foreclosure sale.)
When a borrower may redeem prior to the foreclosure sale. The borrower may redeem the property at any time between the acceleration of the underlying promissory note and the foreclosure sale.
Redemption prior to the foreclosure sale does not occur very often. In practice, borrowers do not often redeem before a foreclosure sale. This is because borrowers who have access to enough funds to redeem the property prior to sale usually don't fall behind in payments in the first place.
Some states have passed laws that offer an additional amount of time to redeem the property following the foreclosure sale. This right is called a "statutory right of redemption" because the amount of time allowed to redeem after the sale arises solely from the state statute. Sometimes, state law gives the foreclosed borrowers the right to live in the home during the redemption period. (Read more about the statutory right of redemption.)
To find out if your state offers foreclosed homeowners a post-sale redemption period, see our Key Aspects of State Foreclosure Law: 50-State Chart or consult with a foreclosure attorney.