Mortgage reinstatement: What it is and how it works

If you’ve missed payments, mortgage reinstatement is the most direct way to bring your loan current and avoid foreclosure. Learn more about mortgage reinstatement, how it works, and alternative options for catching up if you’ve missed payments.

Key takeaways:

• Mortgage reinstatement brings your loan current by paying the full past-due amount, including missed payments, interest, and fees.
• Reinstatement is time-sensitive. Your servicer will set a deadline, and the amount you owe may grow the longer you wait to act.
• If you can't afford reinstatement, other options include working out a repayment plan, loan modification, forbearance, or free help from a HUD-approved housing counselor.

What is mortgage reinstatement?

Mortgage reinstatement, also called loan reinstatement, restores a delinquent loan to good standing by paying the total amount past due. It resolves a mortgage default, which happens when a borrower stops meeting the terms of their promissory note or deed of trust, most often by missing payments.

What makes reinstatement different is that it doesn't change your loan terms. You pay what you owe, including missed payments, interest, and fees, and your mortgage continues exactly as it was before you fell behind.

If it’s reassuring, foreclosure doesn't typically happen right when you miss a payment. Foreclosure typically starts after a few missed payments, which gives servicers a window of time for you to request a reinstatement quote. The sooner you contact your servicer, the more options you will have.

What your mortgage reinstatement amount includes

Your reinstatement amount includes your missed payments plus any fees the mortgage servicing company charged you as a result of the default.

Here's a simplified example of how the math works for a borrower who missed 5 months of payments.

Exact fees vary by servicer and by how far along you are in the default or foreclosure process, so check the current total with your servicer before sending payment.

How mortgage reinstatement works

Reinstating a mortgage before foreclosure follows a straightforward process: request a quote, review it, pay the full amount, then resume regular payments.

How to request a reinstatement quote

If you've missed a payment, contact your servicer for a reinstatement quote.

If you're a Rocket Mortgage client, the fastest way to get a quote is to call us. You also can request a quote by sending in a written request

What is a mortgage reinstatement letter?

A mortgage reinstatement letter, often called a reinstatement quote or statement, is an official document from your mortgage servicer that states the exact amount you must pay to bring a delinquent loan current and stop foreclosure.

Your servicer's written response should include:

• The total amount due, broken down by missed payments and fees
• Number of payments missed
• Payment instructions
• An expiration date for the quote

Make sure to pay attention to the expiration date. If you miss it, the amount due can increase, since new payments, interest, and fees keep accruing in the meantime.

What happens after mortgage reinstatement?

Once you pay the full reinstatement amount by the deadline, your servicer stops the default or foreclosure process, and your loan is no longer considered delinquent for servicing purposes. From there, you resume regular payments for the rest of your loan term, with no change to your mortgage interest rate or repayment schedule.

Reinstating doesn't erase your payment history, though. Late payments already reported to the credit bureaus can generally stay on your credit report for up to 7 years, even after you bring the loan current. Ask your servicer how and when it will update your account with the credit bureaus, since that timing isn't set by one specific rule.

Your right to reinstate a mortgage

Whether you have a legal right to reinstate is dependent on where you live and what your loan documents say. Many states give homeowners a statutory right of redemption that allows them to reinstate their mortgage before a foreclosure sale, and a lot of mortgages and deeds of trust include a similar right even in states where the law doesn't require it.

Mortgage reinstatement requirements

To reinstate a mortgage, you generally need to:

• Request a written reinstatement quote from your servicer
• Pay the full past-due amount, including fees, before the expiration date
• Pay using the method your servicer requires, potentially through certified funds or a wire transfer
• Resume regular monthly payments afterward

Since your reinstatement amount is based on the exact past-due balance, that will be the amount you owe. There’s no room to negotiate fees.

Loan reinstatement vs. loan payoff

Loan reinstatement and loan payoff both stop a foreclosure from going through, but they aren't the same thing. Reinstatement brings your loan current so you can continue making regular payments, while a loan payoff means paying off your entire remaining balance at once.

Can you reinstate your mortgage after foreclosure starts?

Yes. Preforeclosure is the period after your servicer files a default notice but before your home is sold. In most cases, you can reinstate your mortgage during this stage to stop the process.

Reinstating after foreclosure begins is usually more expensive, since you'll also need to cover the servicer's foreclosure-related costs, such as attorney fees, court costs, and any funds that were paid in advance for taxes or insurance.

Can you negotiate the terms of mortgage reinstatement?

You generally can't negotiate the reinstatement amount, since it reflects the actual past-due balance you owe. Your servicer may be able to qualify you for other options if you can't make a lump sum payment. Some options you may be able to qualify for include

• Explore loss mitigation options. Loss mitigation is the umbrella term for servicer-offered alternatives to foreclosure. If keeping the home isn't realistic, you can begin researching how to gracefully exit the home.
• Repayment plan. Add a set extra amount to your regular payment. These plans typically are short-term, often 3 – 4 months, and require approval from your servicer.
• Loan modification. Get new loan terms, often with missed payments rolled into your principal balance and extending your term.
• Forbearance. Pause or reduce payments temporarily during a hardship, then repay the difference in full at the end of the forbearance period. Forbearances are typically 3 months.
• Deed in lieu of foreclosure. Voluntarily transfer the home back to your lender, who agrees not to foreclose, and avoids a formal foreclosure process.
• FHA partial claim. If you have an FHA loan and qualify for a partial claim, it advances the past-due amount as an interest-free subordinate lien. You repay it when you sell the home or pay off your first mortgage.

Getting help avoiding foreclosure

You can also find help from sources other than your servicer. If you're facing foreclosure or issues paying your mortgage, reach out to a HUD-approved housing counselor. A HUD-approved housing counselor works for a housing counseling agency certified to give homeowners free, unbiased advice for preventing foreclosure.

Foreclosure prevention counseling through these agencies is free, and counselors can review your loan documents, explain your options, and help you communicate with your servicer.

Find one through the Consumer Financial Protection Bureau’s counselor tool or by calling the Homeowner's HOPE Hotline at (888) 995-HOPE.

What to do if your reinstatement quote seems wrong

Before you send any money, go through your quote line by line and compare it with your payment history. Servicers do make mistakes, and an inflated quote can cost you hundreds or thousands of extra dollars.

If you find a mistake, send a notice of error. This is a formal written complaint that requires your servicer to investigate and correct a specific mistake, such as an inflated reinstatement quote. If something looks off, send your servicer a written notice of error describing the mistake you’ve seen.

FAQ

Here are answers to common questions about mortgage reinstatement.

Can a mortgage reinstatement be denied?

Yes, a servicer can deny reinstatement if you don't pay the full amount by the deadline, if you've reinstated and defaulted repeatedly on the same loan, or if your loan documents or state law don't provide a reinstatement right in your situation. Some loan programs limit how often you can reinstate. For example, FHA rules generally require lenders to allow reinstatement if you pay the full amount needed to bring the loan current. Still, they provide limited exceptions, including when the lender accepted a prior reinstatement after foreclosure proceedings began within the previous 2 years.

How much does it cost to reinstate a mortgage?

Reinstatement costs the total of your missed payments plus any late fees, inspection fees, and – if foreclosure has started – legal and administrative costs your servicer has incurred.

How long do I have to reinstate my mortgage?

There’s no standard reinstatement deadline. Your loan documents and state law determine how long you have to reinstate your mortgage. Some common Fannie Mae and Freddie Mac mortgage forms allow borrowers to reinstate up to 5 days before a scheduled foreclosure sale, or later if applicable law provides more time. Federal rules generally prevent a servicer from issuing a foreclosure notice until you’re more than 120 days delinquent, but 120 days is not a reinstatement deadline. Check your mortgage or deed of trust and ask your servicer for your exact deadline.

The bottom line: Mortgage reinstatement can help you keep your home

Mortgage reinstatement can bring a delinquent loan current and help you avoid foreclosure, but it works best when you act as quickly as possible. Request a reinstatement quote as soon as you fall behind, look at it carefully to check for any errors, and pay by the deadline if you can.

If the lump sum payment just isn't realistic, don't wait too long to look at other options. A repayment plan, loan modification, or deed in lieu of foreclosure may fit your situation better, and a HUD-approved housing counselor can walk through all of them with you for free.

If you’re struggling, connect with your lender as soon as possible. Your lender can help you explore your options for mortgage help.