Reinstating your mortgage is a way to avoid foreclosure without paying your loan in full. While the idea that you can keep your house is reassuring, it will not be easy. You will need to bring the loan current and pay additional costs associated with the foreclosure. This will be near impossible if your financial situation has not improved since your loan became delinquent.
The first hurdle when attempting to reinstate your mortgage is getting the lender to agree. You will need to make the request, either in person or through an authorized representative to the lender’s legal counsel or trustee. The lender will review your request and put together a reinstatement quote. This is the easiest part of the reinstatement process as it is nothing more than information gathering at this point.
The difficulty in the reinstatement process comes in the form of making the reinstatement payment. If you’re this close to foreclosure, you’ve been delinquent for at least six months. To reinstate the loan, you have to pay all outstanding principal and interest in addition to late charges, legal fees and inspection costs. To make things even more difficult, this payment must be made in one lump sum. As you haven’t been able to make a single payment in months, making all back payments plus fees will take a major windfall or overall change in your financial situation.
The reinstatement process would be a bit easier if you had some time to gather the money, but unfortunately, time is not on your side. To stave off foreclosure and reinstate your mortgage, you must make that one lump-sum payment by 5 p.m. on the last business day before your home goes to auction. You also run the risk of not making it in time if you rely on the mail to deliver the payment. If you can manage to get the money together on time, make sure to deliver the funds in person.
The cost and the short time frame make reinstating your mortgage a very difficult process. That aside, there are some things you can do to ease the burden somewhat. First, pay whatever you can whenever you can once you become delinquent. Lenders apply partial payments to fees, interest and the principal balance, in that order. These small payments won’t bring the loan current, but because you’ll be paying everything at once, any dent you can make will be helpful. Also, make and remain in contact with the collections department as soon as possible. You may even be able to work out a modification or forbearance agreement to lower your payments while you work on getting the funds together to reinstate the mortgage.
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