You can usually be delinquent on your mortgage payment by 120 days before the foreclosure process begins. However, that can vary based on other factors, including your lender's particular policies and the state of the housing market in your area at the time.
Key Takeaways
- In general, a lender won't begin foreclosure until you've missed four consecutive mortgage payments.
- Timing can vary from lender to lender, as well as the state of the housing market at the time.
- Lenders generally prefer to avoid foreclosure because it is costly and time-consuming.
- Asking your lender to work with you to help pay your missed mortgage payments may allow you to stay in your home.
- Your lender will notify you before you go into foreclosure, which may allow you to make a plan.
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Foreclosure Practices May Differ By Lender
Foreclosure practices can differ from one lender to another and from one country to another. If your lender has a large portfolio of low-risk loans, it may be more lenient regarding missed payments or might make allowances for individual borrowers. Often, such a lender will forgive the occasional missed payment and may not pursue foreclosure unless you continue to miss more payments. Some lenders offer skip-payment mortgages to homebuyers that allow a grace period for nonpayment.
On the other hand, if the lender has a portfolio of high-risk loans, foreclosure proceedings might begin after as little as two missed payments. Even if you are a low-risk borrower, the proceedings could be triggered by standards relating to the overall default risk of the mortgage pool owned by the lender.
Mortgage lending discrimination is illegal. If you think you've been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take. One such step is to file a report with the Consumer Financial Protection Bureau or the U.S. Department of Housing and Urban Development.
Impact of Housing Market
The general state of your local housing market is another factor that can play a role in the timing of foreclosure proceedings. If the neighborhood or region has many pending foreclosures, you will likely be able to stay in your home longer because local housing authorities and the courts may be backlogged and lack the resources to process so many cases at once. While this can vary greatly depending on the mortgage lender and situation, there have been instances when people have missed several monthly payments before finally losing their homes.
If you are in default on your mortgage, your loan servicer should contact you multiple times to attempt to resolve the situation. Typically, by the 36th day after your last payment, it will contact you by phone. By the 45th day after you miss a payment, your mortgage servicer must contact you in writing and provide information regarding your options.
Although most lenders will not begin the foreclosure process over a single missed payment, it does put you in breach of your mortgage agreement. That's why it's important to let your lender or loan servicer know as soon as possible if you think you're going to miss or be late with a payment.
A Typical Mortgage Foreclosure Timeline
Though the mortgage foreclosure process can differ from lender to lender and state to state, it usually follows the same general process.
Grace Period
First, you most likely have a 15-day grace period after your mortgage payment's due date. If you pay within this time, you're all good. If you fail to pay and then miss another payment, things get more complicated. Your lender may impose late fees and also report you to the credit bureaus, which will harm your credit score.
Default
When you miss the second payment, you're considered in default. At that point, your loan servicer may become more aggressive in attempting to collect. This can be a frightening situation, but you may still be able to come to a workable agreement. Foreclosure is messy, time-consuming, and costly for the lender, just as it is for the borrower, so it's in their interest to work with you if at all possible. Some lenders will agree to a loan modification, which changes the terms of your original mortgage to make it more affordable.
Preforeclosure
By 90 days, if you haven't come to an agreement with your mortgage lender and you've missed three mortgage payments, you are in a more serious situation. You should receive a letter from the servicer stating that you have 30 more days to bring your account up to date. If you want to stay in your home, you'll need to speak with the lender or loan servicer to avoid foreclosure proceedings. They will generally expect full payment of the amount you owe, but you may be able to negotiate another arrangement.
If the 30-day period ends without reaching an agreement or making the payments, foreclosure will start. By this point, you've missed four monthly mortgage payments.
What Is Foreclosure?
Foreclosure is a legal process through which lenders take ownership of a mortgaged property after a borrower has defaulted on the loan.
Will Foreclosure Hurt My Credit?
A foreclosure will stay on your credit report for seven years and can make it more difficult or expensive to get other credit, such as a credit card or car loan. However, its effect will diminish over time, especially if you keep up with your other bills.
How Long Does Foreclosure Take?
The credit bureau Experian says foreclosure normally takes from a few months to several years. ATTOM, a company that collects foreclosure data, says the time recently averaged 720 days nationwide, although Louisiana and Hawaii had the longest average foreclosure times of 2,641 and 2,031 days, respectively.
Where Can I Get Help to Avoid Foreclosure?
The Consumer Financial Protection Bureau (CFPB) suggests contacting a Department of Housing and Urban Development (HUD)-approved housing counselor for help if you're having trouble paying your mortgage. The CFPB has a search tool on its website for finding one in your area.
The Bottom Line
If you're having trouble keeping up with your mortgage payments and are concerned about the possibility of foreclosure, contact your lender or loan servicer sooner rather than later. Many lenders will start foreclosure proceedings after four missed payments, but most would rather work with you before that to see if you can agree on a plan to avoid it.
