Redemption Rights

Redemption rights summary: 

• Redemption rights could help you keep your home in case of foreclosure—but only if you have enough cash to pay the overdue debt plus fees. 

• Different states have different laws for redemption rights, and some states are more generous to foreclosed homeowners than other states. 

• Exercising your redemption rights could be your best and final chance to save your home from foreclosure.

Redemption Rights Definition and Meaning

Redemption rights are a special kind of legal protection for people who fall behind on their mortgage payments and go into foreclosure. This is also known as the right of redemption. It lets you pay your overdue mortgage and fees to stop from losing your home.

If you’re a homeowner who is experiencing serious financial hardship and the lender forecloses on your home, you still might be able to keep your home after foreclosure by exercising your redemption rights. 

To use redemption rights to keep your foreclosed home, you need to pay the lender for the overdue mortgage balance. You also pay any interest and fees that have accumulated. 

You typically need to act quickly, before the lender sells your home at a foreclosure auction. However, the time you have to exercise redemption rights varies from state to state. Some states will allow people to use redemption rights to recover their homes after a foreclosure auction, or for several months after a new buyer has purchased the foreclosed home. 

One challenge with redemption rights is that you need some extra cash to take advantage of this protection. Redemption rights could allow you to save your home after foreclosure, but only if you can afford to pay the lender all your unpaid debt plus any fees or penalties you may have incurred. 

Whether or not you can use redemption rights, it’s important to remember that even if you have trouble with unpaid debts or a foreclosed mortgage, you still have rights and choices. Redemption rights are one example of how people can still get debt relief and recover from tough situations with overdue bills. 

Key Aspects of Redemption Rights 

Redemption rights don’t apply to every type of debt and aren’t relevant to every situation. Some homeowners might not be able to use redemption rights, and the rules are different based on state property laws. 

Here are a few key aspects of redemption rights that you might need to know. 

It's only for home mortgages 

Redemption rights are a form of debt solution that’s applicable only to home mortgage loans that go into foreclosure, not other types of debt. The idea of redemption means being able to get redemption after foreclosure and take back ownership of a home that was seized. 

Different laws for different states 

Some states don’t allow redemption rights after a home is foreclosed. If you fall behind on your mortgage payments and your lender seizes your home, it’s too late to get the home back. But other states have more generous protections for foreclosed homeowners. Talk with an experienced foreclosure attorney if you need professional advice about foreclosure and rules for redemption rights in your state. 

Statement of charges 

If your home is in foreclosure and you want to use your redemption rights, ask your lender for an official statement of charges. This lists your overdue payments on the mortgage and any other fees, such as interest, property tax, or homeowners association dues, that you need to pay to satisfy the overdue debt. Understanding your statement of charges helps you determine how much money you would need to pay to recover your home. 

Pay off the overdue amount 

As long as state laws allow, you could exercise your redemption rights if you can pay your lender for the overdue mortgage payments and any other fees listed in the statement of charges. Redemption rights are a way of giving you one last chance to get caught up on overdue mortgage payments before your home is gone.