What Is the Reinstatement Period in Foreclosures?

If you are behind on your mortgage, you do not necessarily have to lose the home to foreclosure. If you are able to get back on track, contact your lender to discuss reinstating the loan. The reinstatement period is the amount of time you have to pay the delinquent balance plus any fees or costs.

Reinstatement Rights

A mortgage reinstatement is restoring a loan after the lender initiates the legal process of repossessing the home through a foreclosure. Reinstatement offers homeowners a final opportunity to save their homes by bringing payments current. The reinstatement period is not specific to judicial or nonjudicial foreclosures, although each state sets the specific laws regarding reinstating the loan. There is no federal requirement for lenders to offer borrowers the right to reinstate the loan after the grace period expires. A reinstatement period should not be confused with the redemption period. Unlike the reinstatement period, the right to redeem the home occurs after the home is sold and requires the homeowner to pay the entire loan balance plus fess.

Length of the Reinstatement Period

The amount of time you have to repay the debt can vary, depending on the state. Some state reinstatement periods expire the day before the foreclosure sale occurs. In other states, the debt must be paid within a specified amount of time, generally five business days before the sale. In Wisconsin, the court determines the length of the reinstatement period. For example, homes that are abandoned typically have a two-month reinstatement period, while other homes have a 12-month period. For California homeowners, reinstatement is limited to 90 days after the lender records the notice of default.

Amount to Reinstate

The amount to reinstate the loan depends on the number of missed payments along with related fees, such as court and attorney costs. Since late fees and interest are accrued, several months of missed payments can result in a high balance, depending on the amount of your mortgage payment. However, once you are current on the loan, you may be eligible to refinance. You may also be able to lower your payment through a loan modification.

Help Covering the Costs

If you are unable to obtain the funds to reinstate the loan, consider applying for assistance through federal programs or nonprofit organizations. The HUD Emergency Homeowners' Loan Program provides an interest-free loan of up to $50,000 that can be used to cover a delinquent balance. Some local charities and churches assist needy families by granting a one-time payment to prevent foreclosure. Communicate with your lender to inquire about possible work-out options. If you need help negotiating with the lender, contact a HUD-approved housing counselor. Homeowners can find a local counseling agency by visiting the HUD website.