Reinstatement vs. Redemption
Homeowners that are behind on their mortgages, and possibly facing foreclosure, have several remedies available to them. These remedies depend on the laws of their state, but two that are generally available in most states are redemption and reinstatement.
Right of redemption
Redemption is the payment of the entire balance of the loan, plus costs. For individuals who somehow experience a major financial windfall, redemption is a viable solution. Depending on your own state’s laws, redemption can even save your home once it is set for a sheriff’s sale.
By contrast, reinstatement is paying off the delinquent balance and bringing the status of the loan current. Obviously, reinstatement is more likely to be within the reach of the average consumer. In some states, this is defined by a statute. In others, common law or the terms of an individual’s mortgage may define this right. Reinstatement involves paying off the missed payments on the loan, as well as some penalties, late fees and possibly attorney’s fees. Reinstatement is designed to get a borrower back to current status on his or her mortgage. Once the loan is reinstated, the borrower must continue to make his or her regularly scheduled payments. The right to reinstatement usually expires within ninety days of being served with a summons for a foreclosure action. Either of these options will ultimately cure, or stop, a foreclosure action. Pursuing either option can be done without an attorney. However, it’s usually prudent to engage an attorney to make sure that your interests are adequately protected if your case is complex.