Legal Solutions for You,
Your Family & Your Business

Reinstate Your Mortgage

If you have enough cash, you can “reinstate” your mortgage by making up all the missed payments plus fees and interest the lender charges you. Your state’s law will probably give you a certain amount of time, after the lender gives you notice that the foreclosure is beginning, in which you have a legal right to reinstate the loan this way. (You can check your state’s rule in the appendix.)

For example, in California you have the right to reinstate your loan for three months after the lender mails you a notice of default. After that period ends, if you haven’t negotiated a workout, the lender can and usually does accelerate the loan (notify you that it is declaring the entire amount due immediately) and send you a notice of sale, telling you that the house may be sold in 21 days.

In some other states, the lender may accelerate the loan as soon as you fall behind in your payments, and the law does not give you an opportunity to reinstate. But more and more lenders are not eager to accelerate the loan and push ahead with foreclosure; they would prefer to work something out with you.

If you have enough money to be considering reinstatement, you can probably also negotiate something with the lender. Keep in mind that most lenders don’t want to foreclose—it’s a hassle for them, especially these days when house prices have fallen and banks don’t want to be saddled with real estate that may be hard to sell.