Mortgage Payment Default: How Long It Takes Before Foreclosure Begins

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Want to learn about mortgage payment default? Let’s check it out.

The act of taking out mortgage payment usually involves borrowing some money to purchase a property (house, land, estate) and gradually repaying the loan in installments. The contract agreement usually contains stipulations on when or how often you will be expected to make such payments. This is usually monthly but could also be bi-weekly or some other specified timeframe depending on your arrangements with the lender. Being in default of mortgage loan payments means missing some of the scheduled repayments, which could lead to some processes that will terminate the arrangement, also known as a foreclosure.

What is a mortgage foreclosure?

Mortgage foreclosure is the action taken by a lender when a mortgagor fails to either be consistent with or is unable to keep up their mortgage payments. This includes processes leading to either the sale or repossession of the property to recover whatever amount a defaulter owes. Click here to know about “How Many Mortgage Loan Payments Can I Miss Before Foreclosure?”

How often is one required to make mortgage payments?

A person’s initial mortgage payment is usually due a month from the end of the month in which the home was purchased. After that, it most commonly stays consistent with a monthly schedule or a bi-weekly plan which is less common, with the same amount slated for each payment. These scheduled payments are made in arrears of the previous month on the first day of the next or some other convenient date agreed upon by both parties.

What makes people a mortgage payment default?

While tough times and unstable financial situations could lead to a mortgage payment default, it is not the only cause. Others include but are not limited to:

  • Sale or transfer of the home’s ownership to another person without the lender’s consent.
  • Carrying out fraudulent and illegal activities on the property may lead to its seizure.
  • A significant reduction in the current home value is due to the homeowner’s involvement in the partial destruction of the property.

How long does it take before foreclosure begins?

Typically, a mortgagor’s default in payment is tolerable up to four times in a row before the foreclosure processes begin. This varies between lenders, though, as some start taking action a week after. Within the period of grace (mostly ten to fifteen days after a missed payment is recorded), a notice is sent from the lender to remind them of the past due date. Then, inform them of the late payment fees incurred and outline other options they could consider to remedy the situation. If the borrower still hasn’t made up for the defaults by the fourth month, then the foreclosure process begins. This is also determined by a lender’s terms, policies, and practices; or the state laws regarding such matters.

Implications of a foreclosure

It is bad enough when a person loses their home. So there’s a physical and emotional strain on the person and their family. There’s also a bad credit score record, making it hard for one to be considered when trying to obtain additional loans.

How to avoid a foreclosure

It is no doubt that a situation that leads to foreclosure is one that you wouldn’t look forward to. It is therefore essential to note those things you can do to avoid finding yourself in this situation of mortgage payment default.

  1. The first and essential thing you can do is be sure to make your payments on time. This ultimately keeps foreclosure far away from your steady homeownership plans.
  2. Consider some refinancing options like the Home Affordable Refinance Program (HARP), which assists homeowners who are struggling with their mortgage payments. You’d have to be eligible, though. If you aren’t, look for others.
  3. Talk to your lender. Maintaining effective communication with your lender will go a long way in helping you prevent situations such as that of foreclosure. Help them understand the reasons behind the default, and they might have some suggestions on what you could do to salvage or remedy the situation.

Suppose you find yourself in a challenging financial situation that may lead to a default on a mortgage payment. In that case, it is best to explain things early to your lender to get counseled on the best course of action to take before foreclosure begins. If it is inevitable, they might also have some information or suggestions on how to handle the whole deal of being mortgage payment default.

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