right of redemption

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The right of redemption refers to the right of a homeowner to save their home after the lender initiates a foreclosure action. The right of redemption protects the homeowners from forfeiting their homes if they successfully pay the amount they owe to the lender, even after the lender has completed the foreclosure action and put up their home for a public auction sale. The homeowner has to pay the lender their full amount of unpaid debt and any fees they may face from defaulting, interests they might have incurred, and possible penalties. Since state laws govern the right of redemption process, the recovery of property through the right of redemption varies from jurisdiction to jurisdiction. The time frame that the homeowner can exercise the right of redemption is known as the redemption period or the right of redemption period. The right of redemption period post-foreclosure also differs from state to state. For instance, in some jurisdictions, the law goes even further to return the home to the homeowner even after the lender has completed the sale of the residence if the homeowner pays back the owed amount. Some states allow up to 7 months to pay the debt amount for homeowners to reclaim their property.

Generally, the lender takes back the ownership rights of the property when the homeowner fails to make the mortgage payments. Most jurisdictions allow the lender to begin the foreclosure process after 120 days. During the period before the auction process, the homeowners may invoke their right of redemption through reinstatement and protect their right to the property. Some external factors may also affect the time frame for the redemption period, such as whether the homeowner abandoned the property in question or the dollar amount of the original mortgage loan the homeowner owes.

Homeowners seldom invoke the right of redemption because the homeowners who default on their mortgage payments can rarely come up with the full amount of mortgage payments within the right of redemption period.

See also: U.S. Department of Housing and Urban Development, State Property Laws, Debtor and Creditor Law, Mortgage Law.

[Last updated in March of 2024 by the Wex Definitions Team]