Right of Redemption

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The Right of Redemption is statutory, which means that in order for this right to exist, there must be a specific law providing for it.
Redemption is a right that allows the borrower to buy back his or her foreclosed home from the new owner for the redemption price. The price of redemption usually reflects the amount the new buyer paid for the property at auction plus taxes and fees along with costs and interest. In most states that utilize the Mortgage Agreement as the security document for a home loan, the foreclosure is brought forth via a Judicial sale, which recognizes the right for a borrower to redeem his or her property. This right prevents the sale of a foreclosed home from being final until the redemption period expires. This is one of the reasons why Judicial sales are not popular among lenders.

Timeline
The statutory period of redemption after a foreclosure sale is determined by the state where the property is situated. In some states, if the sale generated proceeds high enough to cover the secured debt, the redemption period may be shorter. Also, some states allow the extension of the statutory period for redemption if proven that the foreclosure sale was erroneous or fraudulent.

Do not mistake Right of Redemption for Right of Reinstatement as the Right of Reinstatement represents the homeowner’s right to reinstate his or her loan prior to the foreclosure sale.

Trustee's sale = No right of redemption
In a Trustee's sale (type of foreclosure sale related to the Deed of Trust), homeowners lose both their homes and their right to make any claims on the repossessed property. It is therefore very important that you, as a homeowner with a delinquent loan, understand the foreclosure laws of your state and the security document governing your loan so you can better decide the best course of action for your case. We highly recommend that you seek local legal counsel for assistance in handling your foreclosure.