No Right to Reinstate Once Mortgage Loan Matures


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In a mortgage foreclosure context, you may have heard someone mention the term “reinstatement.” Typically, when a mortgage loan account goes into default due to the borrower falling behind on mortgage payments, the lender oftentimes may be open to allowing the borrower to bring the loan current again by reinstating it. Reinstatement means that the borrower pays the lender the past-due amount, either in a lump sum or through a reinstatement repayment plan (if the lender allows for reinstatement repayment plans), and the lender thus removes the default on the mortgage loan account because the borrower is no longer presently delinquent in payments.

Aside from paying the actual past-due principal balance and regular interest, the borrower may also have to pay late fees, default interest, and possibly the lender’s accrued attorney fees and costs (if the lender has already referred the mortgage loan account to an attorney for foreclosure proceedings), in order to reinstate the account to good standing. Even if you have the financial ability to pay to reinstate your delinquent mortgage loan account, however, you should be mindful of the maturity date of your particular mortgage.

The maturity date is the date on which the last payment under the promissory note and mortgage is due, whether that is a final, regular monthly payment or a balloon payment, depending on what type of mortgage loan you have. Once the date to make the last payment has passed, the mortgage loan is considered to have matured. This means that under the terms and conditions of the original promissory note and mortgage, the borrower no longer has a contractual right to continue to submit monthly installment payments to the lender. Whatever amount—whether small or large—may be outstanding on the mortgage loan account on the maturity date is due in full to the lender.

Therefore, once the maturity date passes, the borrower no longer has the option to request to reinstate the mortgage loan account, and the lender has no obligation whatsoever to work with the borrower to permit a reinstatement of the mortgage loan account. As a mortgage borrower, you thus should always be aware of when your mortgage loan account is going to mature, as you may otherwise inadvertently preclude yourself from the possibility of working out a reinstatement arrangement with your lender if the maturity date passes.

Regardless of whether the maturity date on your mortgage loan has passed, if you are facing foreclosure of your property, we welcome the opportunity to meet with you during a free consultation to discuss what options you may have.

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