When can a borrower reinstate his/her mortgage loan?

Did you know that a borrower almost always has a right to reinstate his/her mortgage loan by making up the missed payments to bring their loan back into good standing?  The rules governing reinstatement depend on the timing of when the reinstatement takes place.  Let’s explore the different rules applicable three common situations.

Pre-Acceleration

The mortgagor retains the exclusive right to reinstate the mortgage by promptly remitting all outstanding mortgage obligations before the mortgagee exercises its option to accelerate the loan’s entire balance. River Holding Co. v. Nickel, 62 So. 2d 702 (Fla. 1953).  Generally, to reinstate a mortgage, a borrower must present all past-due payments that are valid and complete. A partial payment that does not bring the mortgage account current is insufficient to prevent the mortgage from being accelerated. Tompkins v. Jim Walter Homes, Inc., 656 So. 2d 963 (Fla. 5th DCA 1995). 

A personal check might not be enough if the mortgagee wants payment in cash or certified funds. Summa Investing Corp. v. Resolution Trust Corp., 586 So. 2d 1278 (Fla. 3d DCA 1991). 

Post-Acceleration

The rules are different once the mortgage holder calls the loan due and accelerates the entire balance.  Typically the borrower receives a notice of acceleration.  In that instance, acceleration of the mortgage terminates the right of the mortgagor to reinstate by tendering all arrearages-however 2 important exceptions exist:

• The mortgage contract might contain language that deviates from the general rule. The standard Fannie Mae/Freddie Mac mortgage provision titled “Borrower’s Right to Reinstate After Acceleration” includes such language.

• Foreclosure, being an equitable remedy, allows the court to compel a mortgagee to accept past due payments and reinstate the mortgage based on principles of fairness. See White v. Brousseau, 566 So. 2d 832 (Fla. 5th DCA 1990). 

Moreover, many lenders may allow reinstatement, even if the exceptions 2 exceptions  do not apply.

After a Foreclosure Judgment is Entered

It’s possible to reinstate a loan after a foreclosure judgment, but it’s not common. If a lender decides it’s in their best interest, they can ask the court to cancel the final judgment and put the loan back on track. See Fla. R. Civ. P. 1.540(b).

Right of Redemption

Borrowers should also be aware that under Section 45.0315 of the Florida Statutes they always have a right to redeem their loan before a certificate of sale is filed by the clerk of court and by paying the amount in the judgment.  The statute provides that:

45.0315 Right of redemption.—At any time before the later of the filing of a certificate of sale by the clerk of the court or the time specified in the judgment, order, or decree of foreclosure, the mortgagor or the holder of any subordinate interest may cure the mortgagor’s indebtedness and prevent a foreclosure sale by paying the amount of moneys specified in the judgment, order, or decree of foreclosure, or if no judgment, order, or decree of foreclosure has been rendered, by tendering the performance due under the security agreement, including any amounts due because of the exercise of a right to accelerate, plus the reasonable expenses of proceeding to foreclosure incurred to the time of tender, including reasonable attorney’s fees of the creditor. Otherwise, there is no right of redemption.

Volusia County Foreclosure Defense Lawyer

Andrew Pascale is an experienced foreclosure defense lawyer.  If your home is at risk of foreclosure, contact Volusia County foreclosure defense attorney Andrew J. Pascale at 877-667-1211.  This blog is for illustrative purposes only and does not constitute legal advice.