What Is a Home Loan Default?

A home loan is in default when the borrower violates the terms of the contractual agreement. When a home loan is in default, the lender can take certain actions to collect the past due amount.

Time Frame

A home loan default is when the borrower is at least one day late with the mortgage. Technically a lender could foreclose, but you are not likely to see this happen at this stage. A borrower is given ample time to make the account current.

Effects

When a home loan is in default, some lenders will assess a late payment after 10 days. The late payment will remain outstanding until it is paid.

Considerations

When a home loan is in default, it will not show up on your credit report until the payment is 30 days past due.

Prevention/Solution

Lenders may start foreclosure proceedings when you have fallen past due three or four payments. It is best to contact your lender and see if it can offer some assistance. You may qualify for one or two programs.

Warning

You may not be able to get your home loan refinanced when you are in default. It all depends on how late your payments are. Lenders don't like to see your mortgage 30 days past due within the past year.

References

• Bankrate.com: Fending off foreclosure: You don't have to lose your home