Things to Expect During a Mortgage Reinstatement Period
Reinstatement Period
The phrase Reinstatement period refers to a time frame within which a borrower can pay back a lender what he owes, which will effectively stop a foreclosure process. Reinstatement period on a mortgage begins as soon as the lender commences the foreclosure proceedings with the help of the court. And the window closes when the legal proceedings are complete. The borrower can avail the option to prevent foreclosure proceedings by paying all kinds of legal and late fees incurred by the lender as part of the process and making the loan current.
Reinstatement Process
When you fail to make mortgage payments on time, you will get some warning with late fees. Even after that if you don’t compensate, the mortgage will become default. Soon your bank will send a letter confirming that your house is in default. Unless you pay the entire mortgage payment, the bank will go forward with the foreclosure process.
As the default period begins, the bank submits necessary documents with the local court. The court’s ruling will be in favor of the lender, if you refrain from taking any counter measures to prevent the foreclosure. Finally, the lender will sell or auction off the house.
This is the worst case scenario that we discussed above. Certainly, there are other ways to get everything in order, and reinstate the mortgage. Generally, a foreclosure procedure takes about 1 (one) year to be settled. Therefore, you are getting more than enough time to work something out and get the home back in reinstatement period. During the reinstatement period, the lender will actively cancel the foreclosure process with the permission of the court.
Achieving Reinstatement
Although getting your house out of the foreclosure zone is quite tricky, it is not impossible. Begin by taking care of the late fees that you have been receiving. Once you sort them out, you will be on a regular payment schedule as before.
After the default period begins, you must talk to the lender. In most of the cases, the lender or bank is likely to cooperate with you to reach a settlement. The reason is that if you are evicted they don’t get those regular payments. So, it is in their favor to keep you in the mortgage cycle, and they will do almost everything to maintain that. You can always ask for a loan modification to suit your existing budget. Eventually, they may agree to settle for a lower interest rate and payment. All you need to do is prove your integrity regarding the new modification. It will enable you to enter the reinstatement period, without having to leave your house in the first place.