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In California, you might be able to repurchase or "redeem" your home after losing it in a foreclosure, but only under specific circumstances. Whether you can redeem your home depends primarily on whether the foreclosure was nonjudicial or judicial.
In a nutshell, here are the rules on redemption periods after foreclosures in California.
If the foreclosure was nonjudicial, as most residential foreclosures in California are, you can't redeem the home after a foreclosure sale.
Because the vast majority of residential foreclosures in California are nonjudicial, most foreclosed homeowners don't get a redemption period after the sale.
If the foreclosure was judicial, you can redeem your home within three months or one year—or not at all—depending on the circumstances (see below).
To determine whether you can redeem your home after a judicial foreclosure in California, you must first understand the concept of a "deficiency." After a foreclosure sale, the total debt that the homeowner owes sometimes exceeds the foreclosure sale price. The difference between the sale price and the total debt is called a "deficiency."
Example. Say you owe the lender $850,000, but the property sells for $800,000 at a foreclosure sale. The deficiency is $50,000.
In some states and under certain circumstances, the lender can seek a personal judgment, called a "deficiency judgment," against the borrower to recover the deficiency. Generally, once the lender gets a deficiency judgment, it may collect this amount—in our example, $50,000—from the borrower using regular collection methods like garnishing wages or levying a bank account.
If the foreclosure is judicial, you may generally redeem the home within:
But if the sale results in a deficiency and the lender waives a deficiency judgment, or California law prohibits a deficiency judgment in your situation, you don't get a redemption period. (Cal. Civ. Code Proc. § 726(e)).
Under California law, even if the lender uses a judicial foreclosure process, deficiency judgments aren't allowed in cases where the loan was:
Look Out for Legal Changes
In this article, you'll find details on redemption laws in California, with citations to statutes so you can learn more. Statutes change, so checking them is always a good idea. How courts and agencies interpret and apply the law can also change. And some rules can even vary within a state. These are just some of the reasons to consider consulting an attorney if you're facing a foreclosure.
If you get a redemption period after the sale, the levying officer who conducted the sale will deliver a notice to you, either personally or by mail. The notice will indicate the length of the redemption period. (Cal. Civ. Code Proc. § 729.050).
To redeem, you must reimburse the purchaser (the person or entity who bought it at the foreclosure sale) for the total price paid at the sale, plus all lawful charges such as:
To find out the exact cost to redeem, contact the purchaser. Then, you must pay the redemption amount to the levying officer who conducted the sale. (Cal. Civ. Code Proc. § 729.060).
If you and the purchaser disagree on the redemption amount, or the purchaser refuses to give you a redemption price, you may file a petition with the court for an order determining the amount due. When you file the petition, you must deposit the undisputed amount of the redemption price with the levying officer. The court will then determine the amount required to redeem the home. Be sure to file the petition and complete the redemption before the redemption period expires. (Cal. Civ. Code Proc. § 729.070).
Once you redeem, the levying officer will deliver the funds to the purchaser and promptly give a certificate of redemption to you, giving you the right to keep the home. (Cal. Civ. Code Proc. § 729.080).
If you want to keep your home, it's usually better to take action before the foreclosure sale. By acting early, you'll likely have access to more options to save the property, like:
California, like all states, provides an equitable right of redemption before a foreclosure sale. To redeem before the sale, you must pay off the mortgage debt (all of it, not just enough to bring the loan current), including principal, interest, fees, and costs. The equitable right to redeem ends at the foreclosure sale. However, to exercise the equitable right of redemption, you should send the payoff amount to the servicer well before this deadline.
If possible, present the funds in-person to the proper contact designated in the payoff quote, or wire the money well before the foreclosure sale. If a delay in the courier service happens or a bank processing error occurs and your money doesn't arrive in time, the foreclosure sale will happen.
To get information about California foreclosure procedures, possible defenses to a foreclosure, or the procedures for redeeming the home after a foreclosure (if you get that right), consider talking to a local foreclosure lawyer.
If you need information about different loss mitigation options, a HUD-approved housing counselor is an excellent resource who can help you for free.