Do you know your mortgage repayment rights?

What is mortgage restitution?

By definition, mortgage reinstatement is restoring a loan after the lender forecloses against the borrower who never made payments, even after the given grace period. During the foreclosure process, the lender will deactivate the unpaid loan until a trust sale. Before a trust sale, the borrower can still reinstate the home loan up to five days before the foreclosure auction.

To achieve mortgage reinstatement, the borrower must update his mortgage note and pay only with “good funds” the delinquency, including other fees and charges. Upon receipt, the lender will return the loan to its active status.

However, this happens under legal regulation. In most states, borrowers have the right to reinstate their mortgage prior to the fiduciary sale, such as California and Oregon. Unfortunately, Georgia-based borrowers are unable to reinstate their mortgage prior to the trust sale.

Foreclosure and reinstatement right

In the event of a mortgage default under a promissory note and deed of trust, the lender has the option of:

• Exercise the power of sale clause in the deed of trust and file a notice of foreclosure against the borrower to the trustee.
• Collect the promissory note owed, expedite the payment of the full amount of the mortgage and initiate the judicial foreclosure.

Lenders generally prefer foreclosure through a trust sale because it is smooth and less expensive. As a borrower, you should know your legal rights when this happens. Actually, there is a reinstatement law that applies to both options, so:

Under Section 33-813 (A) of the Arizona Revised Statute, the borrower is obligated to pay only “the full amount owed … plus the portion of the principal that would not be owed if a default had not occurred … “That is, the borrower (settlor) can reinstate his mortgage (or fix the default under the promissory note) by paying the lender only the arrears, contrary to the belief that the borrower must pay the full amount of the loan to fix the default and reinstate your mortgage.

Additionally, Chapparral Development v. RMED intern, 170 Ariz. 309, 823 P.2d 1317 (App. 1991), the Arizona Court of Appeals ruled that under Section 33-813 (A) of the ARS, a borrower (settlor) has an absolute right to mortgage reinstatement regardless of if a lender forecloses by the trustee. sale or judicially. The difference is:

1. In a judicial foreclosure, a borrower’s right to repayment is cut off once a foreclosure action is filed and the borrower must pay the full amount owed on the promissory note.
2. In the context of a trustee sale, the borrower can repay it until 5:00 pm the day before the auction date. However, your mortgage reinstatement rights will expire once the sale is made.