What is Mortgage Reinstatement?
If a borrower is behind on their mortgage loan payments, they may be in a position to pay back all of the arrears on the loan and become current again in one payment. This is known as mortgage reinstatement, and it is a method of stopping a foreclosure or sheriff sale.
In order to reinstate a loan, you must first contact your lender and get a quote detailing the exact amount needed for reinstatement. In order for the mortgage reinstatement to be valid, the amount on the quote must be paid in full. This quote should include:
- The amount of all back payments and current payments that are due.
- Late fees, if any.
- Property inspection costs, if any.
- Any costs related to the foreclosure process, if it has begun.
- A recording fee for the notice of sheriff sale cancellation, if applicable.
Note that mortgage reinstatement is different from a mortgage payoff. While both are methods to stop foreclosure, a mortgage reinstatement only brings you current with your normal payments, whereas a payoff satisfies the loan completely.
Can a Lender Refuse My Payment?
Yes, a lender can refuse your payment, especially if you are more than three months behind. Once a loan is in default, the lender may require a lump sum payment covering all missed payments, late fees, and other costs. Payments may also be rejected if your loan has been transferred to a new servicer.
How Long Do I Have to Reinstate My Loan?
The NJ Fair Foreclosure Act requires lenders to allow reinstatement at any time before a final judgment of foreclosure is entered. However, lenders will often accept reinstatement payments up to the day of the sheriff sale itself. Ultimately, your final deadline for a reinstatement payment will depend on your lender, but the lender must provide you with a quote when you request one and must accept your reinstatement payment before a final judgment.
My Lender Won’t Let Me Reinstate My Loan. What Should I Do?
Unfortunately, sometimes situations arise where lenders refuse to provide quotes for reinstatement or refuse to accept valid reinstatement payments. This is against the law. Ira J. Metrick, Esq., helps with foreclosure defense, loan modifications, claiming surplus funds, and fighting off zombie mortgages. We hold lenders accountable when they violate the law and vigorously defend homeowners. If your lender will not provide you with a quote, will not accept your reinstatement payment, or if you are having any other problem with your reinstatement, we can help. Contact us today to discuss your options.
