How Many Missed Payments Until Foreclosure?
- A mortgage is an agreement between a lender and a borrower. In a home mortgage, the lender loans the borrower money and the borrower uses a house as collateral -- meaning that if the borrower cannot pay back the loan, the lender can take the house, sell it and use the proceeds to recover the lent money. The lender views missing even one payment as a serious problem leading towards possible foreclosure; attorney Mory Brenner states that missing one mortgage payment is much more serious than missing a credit card or utility bill payment.
- Brenner strongly recommends contacting the mortgage entity before missing payments and the Federal Trade Commission agrees. Mortgage entities have programs to help borrowers that have found themselves in temporary financial straits and that make an effort to work with the lender. Lenders want borrowers to make monthly payments, and adjusting or modifying a loan to get a borrower back on a payment schedule is much better for the lender than foreclosing on a house and trying to recoup the lent money at an auction.
- Once you miss a payment, the mortgage entity sends a bill for the missed payment and the next payment. If you continue to miss payments, the mortgage entity demands a lump sum (missed payments and late fees) through a Demand Letter or Notice to Accelerate, almost always after the third missed payment. If you cannot pay the lump sum within 30 days, the foreclosure process begins.
- An attorney from the mortgage entity sets a sale or foreclosure date with the local sheriff (depending on the state, another government entity may be responsible). You can still try to enter into an arrangement with your lender, but in addition to the lump sum, you may be responsible for attorney fees. Depending on your state, the time until sale can be 2 to 3 months. After the sale, you enter a redemption period (length determined by state) where you can stop the foreclosure if you pay the full amount that the mortgage entity spent on the foreclosure. After that period, however, the process completes and you have no recourse.