At What Point Do Mortgage Companies Forclose?
If you can't make your mortgage payments, your lender usually contacts you to request payment. At this point, you may be able to negotiate a plan to pay off your mortgage if you can't afford your usual payments. If you do nothing, the lender may eventually decide to start the foreclosure process. The exact timing of this process varies depending on your particular case.
Other People Are Reading
-
First Missed Payment
-
Even missing one single payment can affect your credit score, because most lenders report late payments to credit bureaus. This hurts your chance of getting loans in the future, leading to rejections or higher interest rates. Depending on your lender, you may receive a letter or phone call after missing one payment. If your lender initiates contact, you may be able to start asking about your options for avoiding a foreclosure.
Second Missed Payment
-
By the time you miss two payments, most lenders have made at least one phone call. You need to take your lender's phone calls to explain your situation and discuss what you are doing to resolve the problem. If you make a payment at this point, you can prevent your mortgage from becoming three months in arrears. Missing this payment leads to another decrease in your credit score, making it more difficult for you to get a loan or a refinance.
-
Third Missed Payment
-
After missing the third monthly payment, you usually receive a letter from your lender. Known as a demand letter or notice to accelerate, the letter states the total amount you have so far failed to pay and that you have 30 days to pay that full amount. After receiving this letter, you have few options left other than paying the total amount. If you don't make the payment or negotiate another arrangement by the stated due date, the lender may begin foreclosure proceedings.
Fourth Missed Payment
-
When the 30 days stated in the letter is up, the lender may refer you to its attorney to begin the foreclosure process. The attorney fees become a part of your total delinquent amount. The attorney then schedules the foreclosure sale date, which can be two months or longer from the date of the demand letter or notice to accelerate. The attorney notifies you of the date by mail and a notice on your door. If you don't pay the total amount owed or make other arrangements with your lender by this date, the property goes into foreclosure.
-
References
- Photo Credit Housing, Mortgage, Foreclosure or Real Estate concept image by Kathy Burns-Millyard from Fotolia.com
