Can I Stop a Foreclosure by Paying the Past Due Amount?

When facing a mortgage foreclosure, homeowners often wonder if paying the past due amount can halt the process. It is possible to stop a foreclosure by settling the outstanding balance through reinstatement. This option allows borrowers to bring their loan current and avoid losing their home.

What Reinstatement Means

Reinstatement refers to bringing a defaulted loan back into good standing by paying all missed payments and associated costs in a single lump sum. This action restores the mortgage to its original condition, effectively canceling the ongoing foreclosure proceedings. It allows the borrower to resume making regular monthly payments as if the default had not occurred.

This process is distinct from paying off the entire loan, which involves settling the full outstanding principal balance. Reinstatement specifically targets the overdue amounts, including past principal and interest payments, along with any accumulated fees and expenses. The right to reinstate a mortgage is often outlined within the loan agreement itself or provided by state law. Successfully completing a reinstatement removes the immediate threat of foreclosure, enabling the homeowner to retain their property. It helps homeowners who have experienced a temporary financial setback but are now able to meet their obligations.

Determining the Reinstatement Amount

The first step to reinstate a mortgage is accurately determining the amount required to bring the loan current. This figure encompasses more than just the missed monthly principal and interest payments. It also includes fees and costs incurred by the lender due to the default and foreclosure proceedings. Common components include late fees for overdue payments, and any funds the servicer advanced for property taxes or insurance premiums.

The reinstatement amount also incorporates property inspection fees, which cover the costs of assessing the property’s condition. Legal expenses, such as attorney fees and court costs, are also added. Lenders may also charge for expenses to preserve and protect their interest in the property, along with a recording fee for the notice of cancellation of the foreclosure sale. Homeowners must request an official reinstatement quote, often called a reinstatement letter or statement, directly from their mortgage servicer. This written quote specifies the exact amount due and a “good-through” date, after which the amount may change. Reviewing the itemized breakdown ensures all charges are understood and accurate.

Steps to Reinstatement

Once the official reinstatement amount is obtained in writing, the next step is to complete the payment. Payment must typically be made using certified funds to ensure the transaction is immediate and verifiable. Acceptable methods often include a cashier’s check, certified check, or wire transfer. These payment types provide a clear record and guarantee the funds are available, crucial for stopping a time-sensitive foreclosure.

After payment is remitted, confirm its receipt and processing by the lender. Borrowers should request written confirmation that the loan is current and all foreclosure proceedings are withdrawn. This documentation proves successful reinstatement and removal of the foreclosure threat. After reinstatement, the borrower can expect cessation of foreclosure actions and resumption of regular monthly billing statements. Maintaining clear records of all communications, quotes, and payment confirmations is advisable.

Timelines for Reinstatement

The opportunity to reinstate a mortgage is subject to specific, varying timeframes. Generally, the right to reinstate exists up until a few days before the scheduled foreclosure sale date. This period provides a window for homeowners to cure their default.

Deadlines depend on mortgage agreement terms or state laws, but acting quickly is always recommended once foreclosure begins. Some jurisdictions may have statutory reinstatement periods, while others rely more on contractual provisions within the loan documents. Lenders are not obligated to accept reinstatement after the deadline. Understanding these timelines and initiating the process as soon as possible is important.