Losing your home to the foreclosure process can be devastating, but it doesn't have to be the end of your ownership. State laws vary, but some states give you a window of opportunity to buy your home back or cure the loan after it's been auctioned as a foreclosure.
Depending on the laws in the state where you reside, you may be able to get your home back after a foreclosure.
Right to Cure
Some states give you time after your home's foreclosure auction to "cure" the loan, or pay it back in full. If you're able to get another mortgage for the amount you owe on your original mortgage, you can pay off the original loan and regain ownership of your house. This can be as few as two days after the auction or as many as 30 days, depending on your state's laws.
Not all states offer this option. In Texas, for example, the lender must give you 20 days to cure the loan default before foreclosing, which can take as little as 20 days. After the auction, you lose your right to cure the loan with the bank.
Right of Redemption
In states that allow judicial foreclosures, where the courts get involved to settle the foreclosure issues, you can have up to a year after the auction to buy back your house. In California, for example, judicial foreclosures are often used when the lender knows the home won't sell for the balance owed. A judicial foreclosure helps the lender get a deficiency judgment against you, which means you'll still owe the lender the difference between your mortgage balance and the auction price after the auction takes place.
The state allows you up to a year following a judicial foreclosure to pay the auction price and buy back your home. This does not relieve you of the responsibility of paying back the difference between the auction price and your mortgage balance if the bank received a deficiency judgment against you.
When you're trying to buy back your home using the right of redemption, you must pay more than the auction price, often in a lump sum. You have to pay the bank's foreclosure costs, any outstanding liens on the property and for any repairs or upgrades made to the home by the bank or new owner following the auction. This can raise the cost of your home considerably, so weigh your options carefully before trying to exercises the right of redemption.
Buying It at Auction
Buying back your house at the foreclosure auction is a possibility, if you have the means. This can sometimes get you a lower price, and therefore lower mortgage payments, on your home, but it's tricky. Most lenders won't give you a new mortgage if you've recently defaulted on one, so getting the money in time to buy your house at auction is unlikely.
Some states require you to show proof of auction funds several days prior to the auction and declare your intention to buy the house. If you were able to come up with the funds, you might still be subject to a deficiency judgment that requires you to pay your original mortgage company the difference between the price you paid at auction and what you owed on the defaulted loan. Also, banks tend to start the bidding high enough to cover the balance of the mortgage, so you might be trading one mortgage for another of the same amount.
- FindLaw: Buying the Right of Redemption: A Better Way to Acquire Property?
- Foreclosure.com: California Foreclosure Laws
- Akron.com: After Home Foreclosure: What You Should Know
- Bankrate: Get Your House Back After Foreclosure?
- Consumer Financial Protection Bureau. "How Does Foreclosure Work?" Accessed Sept. 7, 2020.
- Cornell Law School Legal Information Institute. "Judicial Foreclosure." Accessed Sept. 7, 2020.
- Federal Housing Finance Agency. "Management of Deficiency Balances." Accessed Sept. 7, 2020.
- Consumer Financial Protection Bureau. "Factsheet on Delinquency and the 2016 Mortgage Servicing Rule," Page 5. Accessed Sept. 7, 2020.
Based outside Atlanta, Ga., Shala Munroe has been writing and copy editing since 1995. Beginning her career at newspapers such as the "Marietta Daily Journal" and the "Atlanta Business Chronicle," she most recently worked in communications and management for several nonprofit organizations before purchasing a flower shop in 2006. She earned a BA in communications from Jacksonville State University.