The way to answer that question is to check the state law on foreclosures. You can look the law up on many different sites on the web.
I doubt there is the possibility of reinstatement. There might be the possibility of getting the property back by paying off all that was owed. It would depend upon state law and how the lender felt.
I suggest that you read up on the foreclosure law in New York, that is where you will operate. Because, as JT-IN says “it may vary.” It does.
In CA, a non-judicial foreclosure state, any lease which was recorded prior to the recordatioin date of the foreclosuring deed of trust will have priority and will survive. Any recorded after the deed of trust will be wiped off, along with any unrecorded agreements.
Leases and options do not survive a foreclosure. Most foreclosures suits list John and Jane Doe, Unknown Tenant, as a co-defendant. A tenant, being made a party to the suit, can file an answer to the suit, and request that the lease be upheld, but if we are talking residential property, forget it. Any tenant would have the right to competetively bid on the property, but once the sale and confirmation occurs, the decision of occupancy is then controlled by the new owner. An Optionee would be treated the same as a junior lien holder, and named a defendant, and have the right to bid the property in, to protect their interest. No bid; No interest. Sorry!
Once a loan is called due, assuming for a violation of the terms of the mortgage, and the borrower does not comply and pay off the loan, the remedy to the Plaintiff is to file for foreclosure and seek a judgement. Once a judgement is obtained, the Plaintiff can request a liquidation of asset through SS, or Trustee Sale.
This may vary form state to state, but this is the way it works in Ind and Ohio.
JT,
Assuming a property has been foreclosed on and after it has been sold at ss/ts. Is it possible to reinstate the loan. Payoffs although full of lawyers fees is still cheaper in most cases than when the property is sold through a realtor as an REO.