What is reinstatement?

How Does Reinstatement Work?

Reinstatement stops an active foreclosure by bringing the loan fully current. The process has three steps:

1. Request a reinstatement quote: Contact your servicer and request an itemized reinstatement figure, in writing. Federal rules set no specific deadline for a reinstatement quote, but a written request for information generally must be answered within 30 business days (a payoff statement for the whole loan is due within 7 business days). The quote will include all past-due amounts, fees, and costs accrued to date, and will specify a good-through date (usually 10-30 days).
2. Pay the full reinstatement amount: You must pay the entire amount by the good-through date, usually via certified funds (cashier's check or wire transfer). Servicers typically do not accept personal checks for reinstatement.
3. Confirm reinstatement: Procedures vary by state. In New York, if some principal or interest is due and some is still to become due, paying the court the amount due plus court costs and any sale expenses ends the case before a judgment ordering sale, or pauses it after that judgment and before the sale. Your loan returns to current status with the original terms intact.

Reinstatement differs from a payoff: you only pay the past-due amounts and costs, not the entire remaining loan balance. It also differs from a loan modification, which changes the loan terms. Reinstatement restores the original terms unchanged.

What Does a Reinstatement Quote Include?

A typical reinstatement quote itemizes:

• Past-due principal and interest: The total of all missed monthly payments
• Late fees: Usually 4-5% of each missed payment amount
• Attorney fees: Legal costs incurred by the lender in initiating foreclosure — often $1,500-$5,000 depending on the state and stage of proceedings
• Property preservation costs: Inspection fees, winterization, yard maintenance if the servicer ordered them
• Advances: Property taxes or homeowner's insurance premiums the servicer paid on your behalf to protect their lien position
• Recording fees: Costs of recording any foreclosure-related documents

The reinstatement amount can be significantly higher than just the missed payments. For example, if you missed 6 payments of $1,500 ($9,000), the reinstatement amount might be $12,000-$14,000 after adding fees, attorney costs, and advances.

When Is It Too Late to Reinstate?

The reinstatement deadline depends on your state and the type of foreclosure:

• Non-judicial states: The deadline varies by state. In Montana, for example, when a default makes amounts due before the loan's scheduled maturity date, it can be cured any time before the scheduled trustee's sale. After this deadline, only full redemption (paying the sale price) may be available.
• Judicial states: Courts generally allow reinstatement until the court enters an order confirming the sale. In some states, you can reinstate even after the auction if the court hasn't yet confirmed the results.
• Mortgage contract rights: The standard Fannie Mae/Freddie Mac uniform security instrument (paragraph 19) grants a contractual right to reinstate that may extend beyond state law minimums.

What Is the Difference Between Reinstatement and Redemption?

Reinstatement brings your loan current by paying past-due amounts and costs — typically thousands to tens of thousands of dollars. Redemption requires paying the full foreclosure sale price — often the entire remaining loan balance — to reclaim the property after the sale. Reinstatement brings the loan current during foreclosure. Redemption can also mean paying the required debt and foreclosure expenses before the sale, rather than paying a sale price afterward, and any right to redeem after the sale depends on state law. Reinstatement is almost always less expensive and should be pursued first if the borrower can afford it.