How Many Mortgage Payments Can I Miss Pre-Foreclosure?

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How Many Mortgage Payments Can I Miss Pre-Foreclosure?

Typically, the 120-day grace period before the start of the foreclosure procedure applies to mortgage payments. However, it may change depending on other factors, such as the specific rules of your lender and the health of the local housing market at the time.

Be aware that certain states prolonged the foreclosure moratorium, which was enacted by the federal CARES Act in response to the COVID-19 epidemic and concluded on July 31, 2021. It is advised to contact our local housing authority for further information to see whether your state has any foreclosure remedies in place.

Homeowners are encouraged to check any and all foreclosure prevention measures implemented by their state government because of the rapid developments during the Covid-19 pandemic’s peak. For instance, according to the National Consumer Law Center, there are several emergency declarations in existence depending on the state that ban post-foreclosure evictions. These interim measures could assist in keeping people and families in their homes, but they cannot halt a foreclosure sale or buy back a house that has already been sold in a foreclosure.

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 on the state of the housing market at the time.
  • Due to how expensive and time-consuming foreclosure is, lenders normally try to avoid it.
  • You may be able to keep your house if you ask your lender to work with you to make up your missing mortgage payments.
  • Before going into foreclosure, your lender will let you know, giving you time to make plans.

Investopedia / Alex Dos Diaz

Foreclosure Practices May Differ By Lender

Lenders may have different foreclosure procedures. Your lender could be more understanding about missing payments or might make exceptions for certain customers if it has a large portfolio of low-risk loans. Usually, a lender of this kind would overlook the odd missing payment and refrain from filing for foreclosure until you continue to do so.

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However, if the lender has a large portfolio of high-risk loans, foreclosure procedures may start as soon as two payments are missed. Even if you are a low-risk borrower, rules pertaining to the total default risk of the mortgage pool controlled by the lender might start the procedures.

Impact of Housing Market

Another element that may affect when foreclosure actions are initiated is how the local housing market is generally doing. You could be able to remain in your house longer if there are several pending foreclosures in your neighborhood or area because local housing authorities and the courts might be overburdened and underequipped to handle so many cases at once. There have been cases when individuals missed numerous monthly payments before ultimately losing their houses, however this may vary widely depending on the lender and circumstance.

Your loan servicer should get in touch with you many times if you are in default on your mortgage in an effort to work things out. It will often call you on the phone 36 days following your last payment. Your mortgage servicer must get in touch with you in writing by the 45th day after a missed payment to tell you of your alternatives.

Even while the majority of lenders won’t start the foreclosure process with only one missing payment, it does violate your mortgage contract. Because of this, it’s crucial to notify your lender or loan servicer as soon as you can if you anticipate missing or being late with a payment.

A Typical Mortgage Foreclosure Timeline

Though it might vary from lender to lender and state to state, the mortgage foreclosure procedure generally proceeds as follows. It is important to note that homeowners with FHA-backed mortgages have extended deadlines as a result of the Covid-19 epidemic. When it comes to an FHA loan, the owner will have “to 180 Days” starting on the day the foreclosure moratorium expires.

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Grace Period

First, you most likely have a grace period of 15 days after the due date of your mortgage payment. You’re okay if you pay during this window. Things get more difficult if you miss one payment and then fail to make another. Your credit score will suffer if your lender charges late fees and reports you to the credit bureaus.

Default

When the second payment is late, default is assumed. Your loan servicer could then try to collect money more aggressively. Even though this may be a stressful circumstance, you might be able to reach a reasonable compromise. It’s in the lender’s best interest to cooperate with you if at all feasible since foreclosure is nasty, time-consuming, and expensive for both the borrower and the lender. A loan modification, which modifies the conditions of your initial mortgage to make it more affordable, is something that certain lenders will agree to.

Preforeclosure

You are in a more severe scenario if, after 90 days, you still haven’t reached an arrangement with your mortgage lender and you’ve missed three mortgage payments. The servicer should send you a letter informing you that you have 30 more days to bring your account current. To prevent foreclosure proceedings, you must communicate with your lender or loan servicer if you wish to keep your house. Although they will often demand full payment of the debt, you may be able to work out alternative agreement.

Without a deal being reached or payments being made by you after the 30-day window, foreclosure will begin. You’ve now skipped four consecutive monthly mortgage payments.

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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?

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 varied from a high of 3,068 days in Hawaii and 1,822 days in New York to a low of 173 days in Wyoming and 253 in Arkansas.

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.

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