Mortgage Reinstatement: Stop Foreclosure and Save Your Home

Falling behind on mortgage payments doesn’t mean you’ll lose your home. Mortgage reinstatement can help you catch up on missed payments and avoid foreclosure. You pay what you owe in one lump sum, and your loan becomes current again. You can resume making regular monthly payments without the stress of losing your property.

What Is Mortgage Reinstatement?

Mortgage reinstatement means paying the full amount of missed mortgage payments. You also pay any late fees and penalties owed. Once you make this payment, your lender reinstates your mortgage. You go back to making regular monthly payments as if nothing happened.

Reinstatement helps you avoid foreclosure when you’ve fallen behind. You need the funds to catch up completely. Partial payments don’t count for reinstatement purposes.

What Is a Mortgage Reinstatement Letter?

A mortgage reinstatement letter is a written document from your mortgage servicer. It tells you exactly how much you need to pay. Some people call it a reinstatement quote.

Your servicer must usually send you this letter once your loan is in default. Don’t wait if you haven’t received it yet. Contact your mortgage servicer immediately and request a reinstatement quote.

The letter typically includes:

• Total amount needed to bring your loan current
• Missed payment amounts
• Late fees and penalties
• Pre-foreclosure costs like legal or inspection fees
• Any other applicable charges
• Payment deadline
• Payment instructions
• Servicer contact information

Mortgage charges change from month to month. Your quote might be different if you wait too long. Interest and fees add up quickly. Always request an up-to-date letter in writing.

Servicers who refuse to provide reinstatement quotes may violate federal mortgage servicing rules.

How Does Mortgage Reinstatement Work?

Most lenders allow reinstatement even if your mortgage paperwork doesn’t mention it. Reach out to your mortgage servicer early if you think reinstatement might work.

Step 1: Contact Your Mortgage Servicer

Call your mortgage servicer and tell them you want to reinstate your loan. Your servicer manages your mortgage but may not be your original lender. Ask for a reinstatement quote in writing.

The document will show how much you need to pay, including:

• All missed payments (principal and interest)
• Late fees
• Legal or inspection fees
• Other applicable charges

Request the quote in writing for your records. You’ll have clear documentation of what you owe and when payment is due.

Step 2: Review the Reinstatement Quote for Accuracy

Go over your quote carefully once you receive it. Servicers sometimes make mistakes that can cost you money.

Watch for:

• Payments you made that weren’t credited
• Extra fees that don’t belong
• Incorrect due dates or totals

Call your servicer immediately if something looks wrong. Follow up with a written notice of error. Explain the issue clearly and include proof like bank statements or confirmation numbers.

The Consumer Financial Protection Bureau offers a sample notice of error letter with detailed submission instructions.

Your mortgage servicer must respond according to these timelines:

• Confirm receipt within 5 business days
• Investigate and respond within 7 business days
• They can request a 15-day extension with your agreement

Step 3: Pay the Full Reinstatement Amount

Pay the full reinstatement amount by the deadline once everything looks correct. Partial payments aren’t accepted for reinstatement. You must pay the entire balance at once.

Timing matters more than you think. Interest and fees continue adding to your balance. Your servicer may continue foreclosure proceedings if the deadline passes.

Some homeowners use tax refunds, bonuses, or family help to raise funds. Others sell personal property or explore borrowing options. Personal loans or hardship loans from retirement accounts are possible sources. Understand all risks and terms before borrowing from any source.

Step 4: Confirm Your Loan Is Current

Follow up after making your payment to verify reinstatement. Ask your servicer for written confirmation that your loan is current. Confirm that foreclosure has been canceled or paused. Check your next mortgage statement for accuracy.

Call your servicer immediately if your loan isn’t updated correctly. Keep records of every payment and conversation. You may need this documentation later if disputes arise.

What If You Can’t Afford To Reinstate Your Mortgage?

Mortgage reinstatement requires paying a large lump sum. That kind of money may be out of reach if you’re already behind on bills. Reinstatement isn’t your only option to save your home.

Many people explore other ways to avoid foreclosure’s long-term damage. Several alternatives might be available to you based on your situation.

Modify the Loan

A loan modification changes your mortgage terms to make payments more affordable. Your lender might agree to several beneficial changes.

Common modifications include:

• Adding missed payments to the end of your loan
• Reducing your interest rate
• Extending your loan term to lower monthly payments

Some people qualify for a flex modification. You can combine several changes to lower monthly payments significantly. You can catch up without needing a lump-sum payment if approved.

Mortgage Forbearance

Your lender may offer a forbearance plan in some cases. Forbearance pauses or reduces your payments for a set period. You can explore several options at the end of forbearance.

Common forbearance exit options include:

• Resuming normal payments and repaying paused amounts over time
• Adding missed payments to the end of your loan through deferment
• Applying for a loan modification

File Chapter 13 Bankruptcy

Chapter 13 bankruptcy can help if you’re far behind on mortgage payments. You might also be juggling medical bills, credit cards, or personal loans. Filing creates a 3-5 year payment plan to help you catch up.

You can potentially eliminate other unsecured debt through Chapter 13. Many filers stop foreclosure and stay in their homes. You get a handle on your finances while keeping your property. Speak with a bankruptcy attorney for free to learn if Chapter 13 fits your situation.

Sell the Home

Selling your home before foreclosure completes may make sense. You avoid a foreclosure on your credit report. You also gain more control over the transition and timeline.

Some people choose this option when long-term affordability isn’t realistic. Selling gives you a chance to move on without foreclosure consequences.