In the foreclosure process
, the redemption period is a specific amount of time wherein the borrower can pay off the debt and “redeem” or "reclaim" their property. All states allow borrowers to redeem a property prior to a foreclosure sale, but New Jersey is one of the states that also allows you to redeem a property after
it has already been sold via foreclosure. If you are facing foreclosure and unsure of your rights to redemption, here is what you need to know.
The right to redemption is meant to give borrowers one final chance to keep their home. Redeeming a home can include: 1) paying off the debt in total (principal balance plus interest and any accumulated fees) before the foreclosure sale in order to put a stop to the sale, or 2) providing reimbursement of the purchase price to the party who has purchased the property after the foreclosure sale, or otherwise paying off the mortgage debt including fees and interest.
Utilizing the right to redemption before the foreclosure sale
is one of the best ways to avoid foreclosure. In order to redeem your home before the foreclosure sale, you must figure out exactly how much money you will need to present to satisfy the debt. You can do this by requesting a payoff quote (sometimes called a payoff letter or payoff statement) from your loan servicer. Once you know how much money you will need to redeem the property, you will have the chance to make payment anytime between the acceleration of the underlying promissory note and the foreclosure sale.
In practice, redeeming a home prior to a foreclosure sale does not happen very often. The reality is that if a borrower had the funds to redeem the property, they likely would not have fallen so far behind on their payments to begin with. This is where statutory redemption, or redemption after foreclosure
, comes into play. Statutory redemption gives borrowers more time to gather the funds needed to keep their home. In New Jersey, borrowers have up until the court confirms the sale or the lender gets a deficiency judgement to redeem their home after a foreclosure sale.
In order to redeem your home after a foreclosure sale, you will need to pay the full amount of the judgement, plus interest, costs, and all reasonable expenses that the purchaser incurred for taxes, assessments, any prior liens, and necessary repairs after the sale of the home. If the purchaser received any amount of income from the property, as a rental, for example, this amount will be deducted from the total you will need to pay.
The right to redemption is a chance to help you save your home, but it isn’t always realistic for those facing foreclosure. If you want to save your home, but don't think you'd have the ability to redeem it outright, Veitengruber Law
can help you determine the best path through foreclosure based on your specific needs.