A Guide to Catching-Up on Mortgage Payments

Missed payments on your mortgage usually signal to the lender you may be headed for default. Before you give the lender a reason to start foreclosure proceedings, seek alternatives, such as a payment plan, to catch up the loan. 

Reinstating your loan means more than just getting current on the principal and interest costs. In many cases, the lender may add on late payment penalty fees and additional interest. After you reinstate, your loan will appear as paid to date in the lender’s records, and you will resume making your original mortgage payments. If you have fallen behind on your mortgage payments and want to reinstate your loan, your first step is to determine whether the lender has initiated the foreclosure process.

Reinstating Before the Foreclosure Process Has Started to Avoid Forclosure

The moment you think you'll have problems making mortgage payments on time, it's time to contact the lender. Missed payments on your mortgage usually signal to the lender you may be headed for default. The earlier you reach out to them, the more options you will have available to you. Once you have worked out a plan to cure the delinquent payments with the bank, they will delay foreclosure.

Reinstating After the Foreclosure Process Has Started

If you have fallen behind on your mortgage payments and want to pay your arrears but your loan has entered the foreclosure process, a payment plan will not be accepted and you must pay the full amount you are behind to prevent the foreclosure. Once a lender starts foreclosure and hires a trustee, the trustee is in charge of the foreclosure. They are responsible for documenting and holding all reinstatement amounts and quotes.

Make sure you pay the full amount listed on the reinstatement quote. Simply adding up missed mortgage payments and sending that amount may not be the actual amount due. Based on the terms you signed in your original note, the lender may add late fees for missed payments. If you don’t pull a reinstatement quote and send only what you believe is owed, the lender may deem this a partial payment. They will likely keep the partial payment but refuse to show the loan as fully up to date. This could lead to foreclosure.

Common Questions About Catching-Up on Payments

Are the fees attached to the reinstatement quotes negotiable? Sometimes. It is important to review all late fees and attorney’s fees attached to the reinstatement quote. Some trustees and lenders will take advantage of a reinstatement situation by tacking on fees in excess of work performed. There is little regulation on these fees, so it is important to review the fees carefully. If you see something that looks excessive, request a full accounting of each fee. The trustee should be able to provide you a breakdown of how they arrived at the reported fees. Request a breakdown for excessive late fees sent by the lender to make sure they only reflect legal late fees for missed mortgage payments.

Is a partial payment ever acceptable? It may be an option for you to offer a partial payment of the full reinstatement amount in order to get a postponement that will give you time to gather the full funds. Lenders may agree to take a portion of money in exchange for foreclosure postponement. Be careful with this option. Unless you are absolutely, 100 percent certain you will be able to fully reinstate, you shouldn’t send money or you may lose it. Never send money without an agreement in writing that the lender will postpone in exchange for a lump sum received. Because you’re in default, the lender will keep the money you paid regardless of whether you’re able to fully reinstate. Don’t do this unless you know will be able to come up with the rest of the money.

Should I accept a verbal reinstatement amount? Don’t accept any verbal reinstatement payoff amount, whether on the phone or in person. Make the lender give you the quote in writing. Verbal reinstatement amounts may be inaccurate and they may change. They are also impossible to verify later. If you send payment based on a verbal quote, the lender could change their mind, and you would have no way to prove what they originally told you.