Right to Cure

As stated on the “Reinstatement of the Note” page, it is possible that your Deed of Trust (or other Security Instrument) contains a provision regarding your rights to reinstatement of the note.  If you have the money to reinstate the loan and the mortgage company is refusing to accept it, or if you have sent the funds to them and they have returned it, it may be possible to force the lender’s cooperation by filing an action to enforce the terms of your security instrument.

There may be several reasons that a mortgage company refuses to allow you to reinstate the note.  Whether they have a right to refuse reinstatement at a certain point will depend on your state’s property and foreclosure laws.  For example, Texas law requires the mortgage company to send a notice of default and to give the borrower twenty days to cure the default.  This document is usually titled something like “Notice of Default and Intent to Accelerate”.  If the loan is not brought current within this time frame, the lender accelerates the note and requires the full balance of the loan to be paid.  Based upon this acceleration, the mortgage company might refuse to accept the amount of the arrears.  

However, it may be possible that the terms of your security instrument allows for the right to cure, even if the loan has been properly accelerated.  There is a deed of trust (security instrument) that is used fairly regularly in Texas that states the following:  “[i]f Borrower meets certain conditions, Borrower shall have the right to have enforcement of this Security Instrument discontinued at any time prior to the earliest of: (a) five days before sale of the Property pursuant to any power of sale contained in this Security Instrument . . .”  This provision would allow the right to cure the arrears up to five days prior to the foreclosure sale, even if the mortgage company has already accelerated the note.  If the loan has not been accelerated, you should hopefully be able to cure the arrears without much issue from the mortgage company.

Check the terms of your security instrument and follow every requirement necessary to entitle you to a reinstatement.  If you have followed every requirement and the lender refuses to accept the funds or to reinstate the note, an action to enforce the security instrument (and perhaps for a temporary restraining order to postpone foreclosure) might be the best course of action.  The correct legal course of action should be discussed with an attorney in your state.

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