What is the right of a borrower in default to reclaim their property before foreclosure called?

The right of a borrower in default to reclaim their property before foreclosure is known as equitable redemption. This concept allows borrowers who have defaulted on their mortgage to pay the outstanding amount due (including any interest and fees) and reclaim ownership of their property prior to the foreclosure sale taking place.

Equitable redemption is rooted in the legal principle that a borrower can restore the status quo by fulfilling their obligations, thereby preventing the lender from taking ownership of the property through foreclosure. This right serves as a form of protection for borrowers, ensuring they have an opportunity to rectify their financial situation and retain their home.

In contrast, the other choices don't apply to the scenario of a borrower reclaiming property before foreclosure. Equity refers to the ownership value in a property above any mortgage or debt. An escalation clause pertains to a specific provision in a contract that allows for adjustments in price or payment under certain conditions, typically in real estate purchase agreements. An encumbrance is a claim or liability against a property, such as a lien or mortgage, that can affect the owner's rights. These terms do not relate to the borrower’s ability to reclaim their property in default, which is specific to equitable redemption.