How To Reinstate Your Mortgage And Avoid Foreclosure
Richard Fonfrias, J.D.
Chicago's Financial Rescue & Bankruptcy Lawyer
Fonfrias Law Group, LLC
When you face foreclosure, you first and best way to avoid it is to get your mortgage reinstated. This means catching up on the mortgage payments you missed, along with paying all of the late fees and charges your lender has assessed against you. In order to reinstate your mortgage, you'll likely be required to pay the full amount in one lump sum.
Lenders will not usually accept reinstatement payments of less than the full amount. However, your lender might offer you a loan modification or workout, in addition to other ways to reduce your losses.
To reinstate your loan...
...start by asking for a written reinstatement quote that is good until a specific date. This will avoid confusion and make sure you can reinstate your mortgage when your lender receives your payment. Your lender will mail you a letter telling you the exact amount due to reinstate your loan. The amount you owe will not be simply the total of the monthly payments you have missed. The lender will surely add late fees and costs, and perhaps even interest.
After your mortgage is reinstated
...your mortgage loan is no longer considered to be in default. Now you can go back to making your usual monthly mortgage payments. Make sure you work with your lender to see that the amount paid for reinstatement is correct and that the lender received it on time. If everything was completed correctly, then your lender has no legal reason to foreclose.
During the preforeclosure stage
...is the best time for you to reinstate your mortgage. When the foreclosure process has begun, your lender can add legal costs into the thousands of dollars to your cost of reinstatement. So if you have the opportunity to reinstate your mortgage, you can avoid late fees, charges and legal fees by doing so as fast as possible.