What is foreclosure redeemed
What does “foreclosure redeemed” mean? When a lender forecloses on a property, the homeowner has one last chance to stop the foreclosure. They can do this by paying off the entire mortgage balance, as well as legal costs incurred by the foreclosure. Doing this is called redemption, and there is usually a 6-month period during which you, as a home owner can collect the money needed to redeem the foreclosure. Often (but not always) the foreclosure will then be noted on the home owner’s credit report as “redeemed” — indicating the home owner successfully stopped the foreclosure.
How Foreclosure Works
The formal process of a foreclosure starts once the lender goes to court to accelerate the promissory note that forms the basis of your mortgage. As soon as the legal system is involved, a clock has started that won’t stop until either your home has been sold or the foreclosure has been redeemed. As a rule, once things have moved to the legal system the lender is no longer willing to work with you to develop an alternative payment plan or otherwise accept delayed payments on the mortgage.
Fortunately, there is still some good news. Even though the auction date for your home may have been set, at least in theory, you can still save your home from being sold.
This is because the foreclosure process includes a “redemption period,” which is set by the judge but usually 6 months. During this period, if you can pay off the balance of the mortgage and the legal fees then the court will stop the foreclosure and you will own your home.
In some cases your lender may even be willing to stop the foreclosure proceedings entirely if you can bring your mortgage current, but not all lenders are willing to do this. A redemption, on the other hand, is almost always possible.
A redemption legally requires the lender to stop the foreclosure proceedings, if you come up with the money to pay off the amount due the lender. If you can redeem the foreclosure, the house is yours.
The downside of redeeming a foreclosure is that it will still be a blemish on your credit record for the next seven years. A redeemed foreclosure is not nearly as damaging as a completed foreclosure — given the choice between redeeming or not, you want to redeem — but it is still an issue. A redeemed foreclosure can make it harder to get good rates on a car loan or other loans, and when you go to renew your current loan you may have to deal with subprime rates or even a rejection from the current lender.
If you’re in a redemption period on a foreclosure, give one of our mortgage specialists a call. We have connected many homeowners with private lenders who replaced their mortgages, pulling them out of the foreclosure process entirely. If you are behind on your mortgage but have not been foreclosed, you still should call us — we can help bring your mortgage current so you avoid having a foreclosure on your credit report entirely.