Reinstatement occurs when the borrower brings the delinquent loan current in one payment. Reinstating a loan stops a foreclosure because the borrower is allowed to catch up on payments in default, as well as past-due fees, costs, and penalties, incurred as a result of the default. Once reinstated, the borrower resumes making regular payments on the loan.
Contents of a reinstatement quote/letter. To reinstate a loan, you must first find out the amount needed to reinstate. You do this by requesting a reinstatement quote or reinstatement letter. The reinstatement quote will show the exact amount needed to cure the default as well as a good-through date for the amount. The quote will ordinarily include:
- all of the back and current payments now due
- any applicable late fees
- the cost of any property inspections
- the attorney/trustee fees and costs for the foreclosure procedure
- other expenses incurred to preserve and protect the lender’s interest in the property, and
- often a recording fee for the notice of cancellation of the sale.
Timeframe for reinstating a loan. Sometimes, the deadline to reinstate a loan is 5:00 p.m. on the last business day before the sale date (but not always). However, it is risky to wait until the last minute to reinstate. If the funds are not delivered on time, the foreclosure sale will proceed. This means if there is a delay in courier service or a bank processing error, you could lose your home. If possible, present the funds in person to the proper contact (which will be designated in the reinstatement quote) well before the deadline. Or, if you mail in your reinstatement funds, send the check via an overnight courier so that it can be tracked.
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