Non-judicial: trustee's power of sale (deed-of-trust states) — faster, no court
Before you read
Test yourself first: 5 questions
Question 1 of 5
The borrower's right to pay the debt and reclaim the property before a foreclosure sale is the:
Answer: A. Equity of redemption lets the borrower cure the default and redeem the property before the sale; some states also allow statutory redemption after.
Question 2 of 5
The borrower's right to redeem the property by paying the full debt before a foreclosure sale takes place is known as:
Answer: B. Equitable redemption (the equity of redemption) allows a defaulting borrower to pay off the debt plus costs and reclaim the property any time before the foreclosure sale is completed.
Question 3 of 5
A statutory right of redemption, where it exists, allows the defaulting borrower to:
Answer: B. A statutory right of redemption gives the borrower a defined period after the foreclosure sale to recover the property by paying the sale price plus costs; it exists only where state statute provides it.
Question 4 of 5
A lender forecloses a $300,000 first mortgage. The auction brings $280,000. Property taxes of $8,000 are owed, foreclosure costs are $12,000, and a $40,000 second mortgage exists. After costs and taxes, the first lender receives:
Answer: B. Distribution order: costs ($12,000), then the superior tax lien ($8,000), then the first mortgage. $280,000 − 12,000 − 8,000 = $260,000 to the first lender (shortfall may support a deficiency claim); the second lender gets nothing from the sale.
Question 5 of 5
In a foreclosure, a second mortgage is generally:
Answer: A. Lien priority usually follows recording order; a second mortgage is subordinate and is paid only after the first is satisfied.
Keep the streak going with more questions like these, each with a full rationale.
Must-know rules
- Judicial: court-ordered sale (mortgage states) — slower, allows deficiency judgments
- Non-judicial: trustee's power of sale (deed-of-trust states) — faster, no court
- Equitable redemption: pay off BEFORE the sale to keep the property
- Statutory redemption: some states allow buying it back AFTER the sale
- Alternatives: short sale (lender takes less) & deed in lieu (hand back the keys)
Foreclosure & Redemption: FAQs
Is Foreclosure & Redemption on the real estate exam?
Yes. Financing & Lending is a scored domain on the real estate licensing exam, and this topic appears in the national portion.
Is this cheat sheet free?
Yes — every page on Cinna RE's resource library is free to read, print and share. The app adds practice questions, mock exams and a readiness score.
