What Is Redemption in Foreclosure?

Redemption is your right to keep or get back a home in foreclosure by paying what the law requires. Before the foreclosure sale, you can generally redeem by paying the full amount of the debt, not just the missed payments, plus the lender's foreclosure costs. After the sale, only some states give you a second chance, called statutory redemption, usually by paying the auction price plus interest and certain costs within a set period, such as 6 months in most Michigan and Minnesota home foreclosures.

What is the difference between redemption before and after the sale?

Before the sale (often called equitable redemption). You pay off the debt the lender is foreclosing on, and the foreclosure ends. Florida's statute shows how this works in a court foreclosure: you can redeem until the clerk files the certificate of sale (or a later time the judgment sets) by paying the amount stated in the foreclosure judgment, or, before a judgment, the full accelerated debt plus the lender's reasonable foreclosure expenses and attorney's fees. Florida law adds that otherwise there is no right of redemption, so in Florida the right ends when the clerk files the certificate of sale after the auction, unless the judgment sets a later time.

After the sale (statutory redemption). A state law lets you buy the home back from the auction buyer for a period after the sale. The buyer's ownership is not final until that period runs out. In Michigan, for example, the buyer's deed takes effect only if no one redeems by the deadline.

Illinois has its own version. Its statutory redemption period runs before the sale: for a home, it ends on the later of 7 months after you were served with the lawsuit or 3 months after the foreclosure judgment, and the court cannot hold the sale until it ends. After the sale, Illinois gives a narrower right only when the lender bought the home for less than the judgment amount: you then have 30 days after the court confirms the sale to redeem by paying the sale price, the lender's confirmed costs, and interest.

Which states allow redemption after the sale, and for how long?

Redemption after the sale exists only where a state statute creates it, and the period depends on the property and how much of the loan is unpaid. Two examples for homes:

Check your own state's foreclosure statute or ask a housing counselor or lawyer, because states without a statute like these give no right after the sale.

How much does it cost to redeem?

The price depends on the timing:

• Before the sale: the full debt in the judgment or the accelerated loan, plus costs. In Illinois, that is the judgment amount (principal, interest, court costs, and approved attorney's fees), plus daily interest at your loan rate from the judgment date and court-approved expenses since then.
• After the sale in Michigan: the winning bid, plus interest from the sale date at your mortgage's rate, plus the sheriff's fee, plus any property taxes, senior liens, association dues, or insurance the buyer paid, with interest.
• After the sale in Minnesota: the sale price plus interest from the sale (at the rate in the certificate of sale, or 6% a year if none is stated), plus amounts the buyer paid from the statute's list, such as taxes and assessments, hazard insurance, recording fees, deed tax, appraisal fees, overdue payments on a senior mortgage, and attorney's fees after the sale up to a cap, each with interest. Nothing outside that list can be added.

Worked example (Michigan). The lender buys your home at the sheriff's sale for $180,000, and your mortgage rate is 6%. You redeem 4 months later, and the buyer has paid $2,000 in property taxes.

• Interest: $180,000 x 6% x 4/12 = $3,600
• Amount to redeem: $180,000 + $3,600 + $2,000 = $185,600, plus the sheriff's fee and the interest on the tax payment

You need the full amount in one payment by the deadline, so line up a new loan or a sale of the home early in the period. Some states add a notice step: for Illinois's pre-sale redemption, the lender's attorney must receive your written notice of intent to redeem at least 15 business days before the date you choose, and you file a certification of that notice with the court clerk.

How is redemption different from reinstatement?

Reinstatement means catching up instead of paying off. You pay the missed payments, late charges, and foreclosure costs, the case or sale is cancelled, and your original loan continues as if the default had not happened. Redemption means paying the whole debt before the sale, or the sale price after it, and the loan does not continue.

Reinstatement takes far less cash than redemption if you can afford the regular payments again. Illinois limits it to once every 5 years on the same mortgage after a court records that you used it, and Arizona caps the trustee's fee at $600 or 0.5% of the unpaid principal, whichever is greater. What happens after a default explains how the past-due amount builds.

When in the process should you think about redemption?

Ask for payoff and reinstatement figures as soon as the foreclosure starts. Reinstatement deadlines fall before the sale, and pre-sale redemption ends at or soon after it (in Florida, when the clerk files the certificate of sale). After that, only states with a post-sale redemption statute give you more time. In a court case, the judicial foreclosure steps show when the judgment and sale happen; in a trustee sale, the non-judicial foreclosure steps show the notice deadlines. How foreclosure works covers what happens after the sale if you do not redeem.