Even if you’ve defaulted on your mortgage and have entered into the foreclosure process, you have a right to reinstate your mortgage and save your home. In this article, we’ll break down everything you need to know about what a mortgage reinstatement is to help you determine if it is the best option for you.
Mortgage reinstatement is one option that can help you stop foreclosure. To learn more about mortgage reinstatement and other options to help you save your home, contact Denbeaux Law today for a free consultation.
What is a Mortgage Reinstatement?
A mortgage reinstatement is a type of loan reinstatement specific to home loans. To reinstate a home loan, you pay all of the missed payments on your mortgage, including any late fees or foreclosure-related costs. Once your outstanding balance is paid and your account is current, your mortgage will be reinstated, and any foreclosure activity will stop.
In a mortgage reinstatement, you only pay back your missed mortgage payments, plus any fees. This is different from redemption, which is when you pay off the entire remaining mortgage balance. During foreclosure, you can redeem your mortgage at any point before the final judgment. However, mortgage reinstatement is only available for a limited timeframe.
How Long Do I Have To Reinstate My Mortgage?
You can reinstate your mortgage after the foreclosure process begins, but you must pay the exact amount by the specified deadline to bring it current. In most cases, you have 90 days after you receive a foreclosure notice to reinstate your mortgage.
Your lender should provide you with a written reinstatement letter for your mortgage that specifies the exact amount needed to reinstate the loan, the deadline to pay, and the accepted payment method. If you have not received this letter, you should request it from your lender. Federal law requires lenders to provide a mortgage reinstatement letter within seven days of a request, unless the loan is already in foreclosure, in which case it must be provided within a reasonable timeframe.
How Much Are Mortgage Reinstatement Fees?
Your mortgage reinstatement amount, including fees, will vary by lender, loan terms, and how far behind the payments are, and you can find exactly how much you owe in your mortgage reinstatement letter. That said, average mortgage reinstatement fees will typically include late fees, property inspection or maintenance costs, and foreclosure costs, such as attorney or trustee fees.
It is important that you get the exact amount that you owe for reinstatement in writing from your lender, in case there are fees owed that you are unaware of. If you miscalculate fees and send the wrong reinstatement amount, a mortgage company can refuse payment and move forward with foreclosure.
How Long Does Mortgage Reinstatement Take?
In general, once the mortgage reinstatement and all fees are paid, the mortgage is reinstated quickly. Most lenders will remove the loan from foreclosure status as soon as the payment is processed.
That said, it is important to be aware that a mortgage company can deny reinstatement. A mortgage company can refuse a payment and deny reinstatement if your mortgage reinstatement payment is late, insufficient, or is sent to the incorrect address. If your reinstatement is denied, your lender can continue with the foreclosure process, so it is important that you follow the instructions on your mortgage reinstatement letter carefully.
Should You Reinstate Your Mortgage After Foreclosure Begins?
Whether you should reinstate your mortgage after foreclosure begins will depend on your financial situation. In general, reinstatement may be a good option if the financial hardship that caused you to default was temporary, you can afford the reinstatement amount, and you can keep up with the regular mortgage payments once the loan is current.
If you can afford the reinstatement amount but would struggle to sustain the mortgage payments, reinstatement may not be your best option. In that scenario, it is often better to explore other loss mitigation, such as modifications, repayment plans, or forbearance, rather than risk default again.
If you are having trouble affording your reinstatement payment, you may be able to qualify for mortgage reinstatement assistance through New Jersey’s Emergency Rescue Mortgage Assistance (ERMA) program. ERMA is a mortgage reinstatement assistance program that can reduce past due payments and provide funds to help qualifying borrowers become fully current on their mortgage. However, there are strict requirements, and not all homeowners qualify.
To better understand whether foreclosure reinstatement is right for you, it is best to speak with an attorney who can review your situation and explain what options are available to help you avoid foreclosure.
Schedule A Free Consultation With Denbeaux Law Today
If you are considering reinstating your mortgage before foreclosure, an attorney can guide you through the process to ensure the reinstatement of your loan is handled properly and gets approved. An attorney can also look at the details of your unique situation and advise you on other loss mitigation options that may be a better fit.
Contact Denbeaux Law today for a free consultation with one of our foreclosure attorneys who can walk you through what happens after mortgage reinstatement and what your options are.
