Reinstatement period: a period where a homeowner can stop a foreclosure by paying outstanding debt.
Reinstatement period: A period of time where the homeowner has the opportunity to stop a foreclosure by paying money which the homeowner owes the bank. The mortgage reinstatement period begins when the bank files a foreclosure lawsuit with the court to start the foreclosure process.
Bringing Your Loan Current During the Reinstatement Period
Homeowners who are behind in their mortgage payments have the opportunity to stop a foreclosure during the reinstatement period, which is the period of time allotted to pay the outstanding balance, in addition to any fees or costs.
A mortgage reinstatement restores a loan after the bank has initiated the legal process of repossessing the property through a foreclosure. Reinstatement affords homeowners a chance to save their property by making outstanding payments. The reinstatement period can be applied to both judicial or non-judicial foreclosures, although each state has specific laws regarding loan reinstatement. At the federal, however, banks are not required to provide a reinstatement period after the grace period concludes. The reinstatement period differs from the redemption period, which requires the homeowner to pay the entirety of the loan balance, as well as fees.
States offer different reinstatement periods. In some, the reinstatement period ends the day before the foreclosure sale. In others, the debt must be paid within a given amount of time, usually five business days before the foreclosure sale. In Wisconsin, for example, it is the court that determines the duration of the reinstatement period with some homes afforded a two-month reinstatement period, while others are granted a 12-month reinstatement period. In California, the reinstatement period is limited to 90 days after the filing of the notice of default.
The reinstatement amount depends on the number of missed payments as well as additional fees, such as court and legal costs. Late fees and interest are accrued, therefore missing several months of payments can add up to a significant balance, depending on the sum of the mortgage payment. Once the loan is brought current, homeowners may be able to refinance their mortgage, or lower their payments through a loan modification.
Several states offer assistance to homeowners who are attempting to reinstate their mortgage loans.
Florida, for example, has the HFA Hardest-Hit Fund, which “provides federal funding to states hardest hit by the aftermath of the burst of the housing bubble. To date, $9.6 billion has been allocated to 18 states and the District of Columbia; Florida’s share totals more than $1 billion,” according to the Florida Housing Finance Corporation.
The Florida Hardest-Hit Fund (HHF) Programs, as outlined on the Florida Housing Finance Corporation, are as follows:
Unemployment Mortgage Assistance Program (UMAP)
Will provide up to 12 months of payments (with a cap of $24,000, whichever comes first) paid directly to the mortgage lender to assist unemployed or underemployed borrowers with their first mortgage. In addition, up to $18,000 can be paid to help satisfy all or some of any past due amounts owed to the mortgage lender; this assistance will be paid prior to the UMAP payments beginning and cannot exceed $18,000 total. Total assistance available is up to $42,000.
Mortgage Loan Reinstatement Payment (MLRP) Program
Will be used as a one-time payment to the mortgage lender to help satisfy all or some of any past due amounts owed on the first mortgage, only. This assistance cannot exceed $25,000 total, and any past due amounts over and above the $25,000 cannot be paid by the MLRP program and are the responsibility of the homeowner.
Downpayment Assistance Program
The Florida HHF Down Payment Assistance (HHF-DPA) is designed to provide qualified first-time homebuyers with up to $15,000 in down payment and closing costs assistance.
Principal Reduction Program
The Florida HHF Principal Reduction (HHF-PR) Program is designed to assist eligible homeowners by providing up to $50,000 to reduce the principal balance of the first mortgage, only, thereby reducing the loan-to-value (LTV) of their outstanding principal loan balance to no less than 100 percent.
Reverse Mortgage Program
The Florida HHF Elderly Mortgage Assistance Program (ELMORE) is designed to assist seniors who are in arrears on their reverse mortgage (also known as a HECM—home equity conversion mortgage) by providing up to $50,000 to pay past due and future property charges, so that they may avoid foreclosure and can stay in their homes.