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What does "Right to Cure" Mean?

By M. Lupica
Updated Jun 04, 2024
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The right to cure letter can be considered a lifeline for borrowers facing loan delinquency. Reports show that as of 2023, about 2% of mortgages in the United States were in some stage of delinquency. The right to cure grants individuals the opportunity to settle overdue payments before a loan defaults completely, providing a crucial window to avoid foreclosure or repossession. 

The lender's notice outlines the period allowed for rectifying arrears, a critical juncture detailed in the right to cure letter. Failure to comply with these terms can lead to severe financial consequences, including potential legal action to recover any remaining debt post-collateral sale. Understanding and acting upon the right to cure can be the decisive factor in maintaining one's financial stability.

After the period in which the borrower has the right to cure, the lender may repossess the item for which the loan was taken or institute foreclosure proceedings. If it is an item that has been purchased with the loan, the company has the right to take and sell the item. Typically, this is done through a public auction, but it may be done through a private sale. In either circumstance, the delinquent borrower has a right to know how and when the item will be disposed.

Once the sale is closed, the lender will apply the proceeds to the existing debt. In the event that the amount received from the sale does not completely cover the delinquent debt, called a “deficiency,” the lender may bring a deficiency action against the borrower. However, if the proceeds from the sale of the item cover the debt, the lender is to return any extra money to the borrower and he or she is cleared of the debt.

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Discussion Comments
By fify — On Jun 24, 2013

Right to cure law is confusing. It changes for different types of property and it changes from state to state. It was my understanding that the right to cure applies to only real estate, but apparently, it can apply to other types of goods as well.

Most of us know about our rights when it comes to real estate, but information about other goods and the right to cure is unclear.

Do we have any law experts here that can clarify this? What exactly does the right to cure apply to?

By serenesurface — On Jun 24, 2013

@ddljohn-- Are you in one of the right to cure states?

As far as I know, a lender is not required to send a right to cure letter in every state. In many states, property can be taken after a borrower is delinquent regardless of whether a letter is sent or not.

I live in Colorado and I know that here, they do have to send a right to cure letter. They also have to give me twenty days to make the payment.

If you live in a right to cure state and did not receive any letter or notice, I think you may be able to go to court about this. You should ask a lawyer.

By ddljohn — On Jun 23, 2013

What if a right to cure notice isn't sent? Does the lender still have the right to take the property or car?

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