A borrower's right to reclaim property by paying the full debt before a foreclosure sale is completed.
Why Equitable Right of Redemption matters on the exam
This term belongs to Financing. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Equitable Right of Redemption
Every Freehold question shows why the right answer is right — and cites its source.
The equitable right of redemption allows a defaulting borrower to:
Reclaim the property for a period after a completed foreclosure sale
Remain in possession indefinitely, rent-free
Pay off the debt in full, plus costs, any time before the foreclosure sale to stop the foreclosure
Force the lender to reduce the interest rate on the outstanding loan balance instead of foreclosing
Show answer & explanation
Pay off the debt in full, plus costs, any time before the foreclosure sale to stop the foreclosure — The equitable right of redemption exists before the foreclosure sale, allowing the borrower to pay the full debt, interest, and costs to reinstate ownership and stop the foreclosure process.
Source: PSI National Real Estate Exam Content Outline §4 Financing
The equitable right of redemption is derived from:
Statutory law enacted after foreclosure
FHA insurance requirements
The Truth in Lending Act
Common law principles recognized in every state
Show answer & explanation
Common law principles recognized in every state — The equitable right of redemption is a common law right recognized in all states, existing up until the foreclosure sale, distinct from the statutory redemption period some states allow afterward.
Source: PSI National Real Estate Exam Content Outline §4 Financing
A statutory right of redemption, where it exists, allows a former owner to:
Redeem the property for a defined period after the foreclosure sale by paying the sale price plus costs
Redeem the property before the foreclosure sale only
Void the original mortgage instrument entirely as a matter of law once the statutory redemption period has fully expired
Automatically regain title without paying anything
Show answer & explanation
Redeem the property for a defined period after the foreclosure sale by paying the sale price plus costs — Unlike the equitable right of redemption, a statutory right of redemption, available only in some states, permits the former owner to reclaim the property for a set period after the foreclosure sale by repaying the sale price and costs.
Source: PSI National Real Estate Exam Content Outline §4 Financing
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