What Is a Reinstatement of a Mortgage?

House with a foreclosure sign.
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You don't have to worry about reinstating your mortgage unless you're facing foreclosure. If you are and if you can lay your hands on some cash, reinstatement may be your ticket out. You'll have a limited period of time in which to act, but in most cases, lenders prefer to reinstate loans rather than get mired in a foreclosure process with an uncertain outcome. So if you can swing it, reinstatement is often a viable option.

Contact Your Lender

Your first step is to contact your lender. A phone call can pave the way but follow up in writing, making an official request for a reinstatement letter or quote. Find out how much money you'll need to reinstate your mortgage along with a firm date through which the lender will honor the reinstatement amount. Ask for written confirmation of this information, along with the name of someone you can reach out to if you have further questions.

Catch Up With Your Payments

The first component of a reinstatement figure represents your past due payments, those you missed that led to the pending foreclosure action. You'll have to make these up in one lump sum payment. You may have until the end of business on the date immediately preceding the foreclosure sale, but check the written response from your lender to make sure. If you're late with the payment, the sale will go through and reinstatement is no longer an option.

You’ll Have Additional Costs

You'll also need enough cash on hand to cover some additional fees payable at the same time you catch up your mortgage payments. These typically include costs your lender incurred by beginning the foreclosure action, as well as any late fees and possibly even court fees for recording your reinstatement. All these costs should be itemized on the reinstatement letter you received. If you don't pay the entire amount -- your past due payments plus additional fees -- your lender can still foreclose.

Keep Making Payments

Reinstatement is typically an option if you've suffered a temporary financial setback. If you've lost your job and aren't certain you can acquire employment again soon, reinstatement won't forestall foreclosure indefinitely because you have to keep current with your mortgage payments going forward or the whole foreclosure process begins again. If you've acquired a ton of medical bills or encountered some other serious situation that makes it seem unlikely that you can continue making regular mortgage payments after you save your property, explore other options with your lender.