What is Home Reinstatement?
Home reinstatement has several meanings that can vary from lender to lender. The specialized meaning that we are discussing is the process of a homeowner getting their house back after a Foreclosure takes place.
People are sometimes surprised to find that with the right guidance and in the right situation, a person can get a home back after Foreclosure.
Who can qualify for Home Reinstatement?
Home reinstatement can only realistically happen in certain situations.
To be eligible for home reinstatement a person must have had their home Foreclosed. If a Short Sale or Deed in Lieu of Foreclosure was used, home reinstatement is not a likely option.
The next requirement is that during the Foreclosure auction, it did not sell to an outside third party. When a home does not sell at auction, the bank or lender retains ownership. When a bank owns a property after foreclosure it is referred to as “Bank Owned” or “Real Estate Owned (REO)”.
Though it is not a requirement, home reinstatement is much more likely if the person involved has at least half of the past due loan amount on hand. A person that is pursuing Home Reinstatement must prove that this home will not be foreclosed again.
How does the Home Reinstatement process work?
Once the above conditions are met, there are two avenues to home reinstatement. In both of the following situations, it is important to note that the final decision is at the grace of the lender. A person pursuing home reinstatement must prove that they can now afford the home.
The first avenue to home reinstatement is known as Rescinding and Reinstating a loan. For this type of reinstatement an experienced attorney analyzes all of the foreclosure documents looking for a mistake on the part of the lender. If an error is found, a person has an opening to get their Foreclosed home back. After agreement with the lender, the previous loan is activated again and the homeowner can move back into their home.
The second path to home reinstatement is called Redemption and it is an exceedingly complicated legal matter. home reinstatement by Redemption would only be considered after all loan and Foreclosure documents are reviewed and no lender errors are found. An experienced and reputable attorney would sit down with a client and weight the costs and benefits of Redemption before moving forward with this process.