Bringing the Loan Current a.k.a. Reinstatement
What is the process of bringing a past due loan current? Bringing a loan current, also known as reinstatement, occurs when the loan is brought current by paying the total amount past due. It is always within your right to fully reinstate your loan within 90 to 120 days of being late on your payments or being served with a Notice of Default. If you get to a point where you are again able to make your mortgage payments, or if your income has returned to its former level, you can negotiate with the bank or lender to bring your loan current by paying off any arrears.
Additionally, the servicer may be able to arrange an increase in monthly payment amounts until the loan is brought current. This means that each month you would add an additional amount of money (determined by the bank) to your regular monthly payment until the amount that was overdue has been repaid. If you can show the bank that you are able to resume making payments, and that you can make up the past due balance by either a lump sum or over a short period of time (12 to 24 months), they may agree to a reinstatement.
If, by chance, you cannot afford a lump sum up front to reinstate your mortgage, a repayment plan can be agreed upon to bring the mortgage current over time. The terms are generally a payment of 1⁄2 of the arrears as a down payment, and 11⁄2 payments a month until the loan is current. The delinquency may include certain legal fees and costs if the mortgage company has started the foreclosure process. Many loan holders require certified funds for reinstatement.
“Both solutions, either paying a lump sum or setting up a repayment plan, would allow you to reinstate your mortgage and keep your home.”