Mortgage reinstatement is your first and best loss mitigation option when facing foreclosure. Mortgage reinstatement means catching up your missed mortgage payments, along with all associated late fees and charges. To reinstate, you must pay the full amount due and owing in a single lump sum.
Mortgage companies rarely accept reinstatement amounts less than the amount due in full. Your mortgage company may offer other loss mitigation options, including modification and workout, in addition to reinstatement.
How to reinstate your loan
Do not assume that the amount required to reinstate your loan equals your monthly mortgage payment times the number of months defaulted. Mortgage companies invariably charge late fees and costs, and sometimes even interest.
Instead, request a written reinstatement quote. Your mortgage company will send you a letter stating the exact amount due to reinstate your loan. Be sure to request the reinstatement amount good through a date certain, often the end of the month. Do this to avoid confusion and ensure that your mortgage will be reinstated in full upon receipt of your payment.
What happens after mortgage reinstatement?
If you reinstate your mortgage, you have restored it to nondefault status. At that point, you can resume your normal monthly payment amount and schedule. You should work closely with your lender to ensure that your reinstatement amount is correct and that is has been received on time. Once your loan has been reinstated, your mortgage company no longer has legal standing to foreclosure. Coming current on your mortgage remains the very best option for avoiding foreclosure.
Mortgage reinstatement in preforeclosure
While you are in preforeclosure is when you have your best opportunity for mortgage reinstatement. Once foreclosure is initiated, your mortgage lender can add thousands of dollars in legal costs to your reinstatement total. If your mortgage company gives you the run-around, be persistent. If you have the ability to reinstate your mortgage, do so as quickly as possible to avoid additional late fees, charges, and legal costs.