What Does No Redemption Mean in Foreclosures?
Redemption is the right to buy back your home after your lender forecloses on it. In some states, the law guarantees you a right of redemption; others allow it only under specific circumstances and some say you have no right of redemption. If you live in one of those states, once your lender takes your house, it's gone for good.
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Foreclosure Sale
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Most states require that after your lender forecloses and takes title to your house, she sell the property at public auction. The lender sets a minimum bid and the largest bid above that takes the property; if there are no bids large enough, the lender becomes the owner. If the property sells for more than you owe on the mortgage, second mortgage and other liens, you get the surplus; if the sale doesn't wipe out your debt, some states allow lenders to sue you for the rest.
Geography
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What happens after the foreclosure sale depends on the laws of your state. Florida, Georgia and Hawaii, for instance, are "no redemption" states, according to the Mortgage Investment website. California grants a right of redemption, but only in judicial foreclosures: If the lender auctions your property without going to court, as usually happens in California, there would be no redemption. Other states allow anywhere from 10 days to a year for you to buy back your property.
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Process
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In states that allow redemption, the exact procedures vary. In Minnesota, for example, you have to pay the new owner's auction bid, plus interest, plus any extra fees or costs spent buying your house. You present the total payment, along with a redemption form, to the sheriff of the county containing your property. In Alabama, the Foreclosure website states, you make redemption by paying off not only the purchase price but whatever debt was left on your original loan, plus interest.
Considerations
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If you buy property at foreclosure auction as an investment, any time and effort you put in will be wasted if the owner buys it back. A homeowner can also sell his right of redemption to another party who might be interested in owning it. Real estate agent David Parrish states on his website that it's safer to buy property when there's no right of redemption, but the risk of redemption is low: Even owners with a legal right usually decide they can't or don't want to spend the money.
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References
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