Missing mortgage payments: How many can I miss before foreclosure?
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Key takeaways
- If you miss one mortgage payment, lenders will often issue you a 15-day grace period to pay without incurring a penalty.
- If you miss four consecutive mortgage payments (or are 120 days late), most lenders begin the process of foreclosure on your home.
- If you cannot make a mortgage payment — even one — it is advisable to contact your lender immediately.
A mortgage involves a contract between a borrower and a mortgage lender in which the lender agrees to provide money upfront while the borrower agrees to repay the debt over time and with interest. The mortgage secures (backs) the debt. As such, a borrower with late or missed payments can face penalties ranging from late fees to the loss of the home, which is collateral for the loan.
What happens if I miss a mortgage payment?
If you miss one mortgage payment, your lender will likely contact you, but it’s unlikely your home will be foreclosed upon immediately. You may receive a formal letter alerting you to the possible actions the lender may take. Do not disregard this notice — it’s a serious matter.
While it may not trigger a foreclosure, ignoring a notice may trigger the filing and recording of a lis pendens. A lis pendens puts the “world on notice” that a lawsuit relating to your property may be pending. If you plan on borrowing money for any reason or getting a new credit card, this lis pendens may create a problem or adversely affect your credit rating. It will also have to be lifted if you try selling your house, as it will show up in a title search.
Although late payments are undesirable, they often come with few, if any, consequences. Many lenders have a 15-day grace period that allows borrowers to make payments after the due date without penalty. However, if the payment is officially “late” (that is, post-due date), the lender is typically entitled to a late fee, generally a percentage listed in your mortgage contract. For example, if your monthly mortgage payment is $1,400, a 5 percent late fee amounts to $70.
If you believe you’ll miss a mortgage payment or already have, contact your lender or servicer as soon as possible. Your lender may offer you a forbearance or loan modification to help you through the hardship. If you are late making your payment but otherwise have a good payment history, you can ask your lender to waive the late fee. (It is unlikely the lender will waive the interest accrued on the loan, though.)
How many mortgage payments can I miss before foreclosure?
Usually, foreclosure proceedings begin after 120 days (four consecutive missed mortgage payments) of delinquency on your mortgage, but this isn’t always the case. The housing market in which you live, your municipality and your lender may all impact the foreclosure timeline.
Foreclosure timelines usually vary per state and lender, and the process takes time. For example, if you fail to contact your lender after you miss a payment, you may receive a notice of default, the earliest foreclosure stage. Do not ignore it. Read it carefully, and if you plan on making the payments, follow the instructions exactly. Failure to follow instructions may negate the benefits of making your payment.
After 90 days, your lender will usually send a formal Demand Letter or Notice to Accelerate, stating you have 30 days to pay your mortgage and bring it up to date. However, getting these letters and notices doesn’t necessarily mean foreclosure is a done deal. Delinquencies can often be rectified even when three or more payments have been missed because most lenders want to avoid foreclosing on a home.
The foreclosure timeline
There are usually five stages in a foreclosure timeline, but often, you can stop the process at any stage by working with your lender to pay back your loan balance before your home actually goes into foreclosure. Here’s the typical rundown:
- Missed payment: You miss your mortgage payment and the 15-day grace period passes. You incur late fees and might receive a call or letter from your lender about the missed payment.
- Notice of default: Your lender will typically file an official notice of default after three months of missed payments and a lis pendens. You will receive a copy via certified mail or even, in some states, find it tacked to your front door; it’s also filed with your local recorder’s office. Unfortunately, receiving a notice of default may impact your credit. It may take a couple of months for the credit agencies to pick it up, but they eventually will.
- Preforeclosure: The preforeclosure stage occurs between receiving your default notice and an auction to sell your foreclosed home. If you pay what is owed during this stage, plus interest, penalties, legal fees and bank fees, your mortgage will be considered current. The window on time during this phase will depend on the state you live in.
- Notice of sale: Next, your lender files a notice of sale and sets a date and time for an auction on your home. News about the sale may be published in local newspapers and public buildings like a courthouse or even posted on the door of your home. The cost of the advertising, and possibly the auctioneer’s fee, will be added to the balance due on the mortgage. In some cases, you can still reclaim your home (called the “right of redemption”) if you can pay all the fees and back payments by the auction date or, sometimes, after it occurs.
- Eviction: This is the final part of the foreclosure process. Your home is sold, and you and your family will be under mandate to vacate; you may have a few days if the buyer allows it. If you refuse an eviction, the sheriff or the marshal will come to your home with the order, and put you and all you own out on the street. However, you may be able to work out a “cash for keys” deal with the buyer or lender. They don’t want the house damaged or to pay for the legal authorities, so they will pay you a modest amount to leave.
Factors that impact the foreclosure timeline
A few factors will impact the foreclosure timeline, including your lender, the laws and regulations surrounding foreclosure in your state and even, in some cases, the housing market.
Foreclosure differs by lender
Lenders may vary on what they consider to be a mortgage going into default. In most cases, a lender will not send a homeowner a notice of default until the loan is 90 days past due or there have been three missed mortgage payments.
Some lenders will wait longer, while others may send a default notice sooner. This is because 90 days is only a common practice, not a legal one. Always check your mortgage terms to understand what may count as a default.
Foreclosure differs by location
The foreclosure process varies by state. These differences can be as simple as whether or not a notice of default should be mailed or posted to your property, how the notice of sale is posted and shared and how and when your home is auctioned.
Keep in mind: The two main types of foreclosure are judicial and non-judicial (also called power of sale).
- Judicial: If you live in one of the 21 states, including Florida, New York, Ohio, and others, with judicial foreclosure, the lender has to file a lawsuit. The homeowner has 30 days to pay their debts, and if they don’t, the foreclosure process moves forward. It can take longer for a foreclosure to occur via this route because the foreclosure must move through the state supreme or housing court. If the courts are backed up, the process can take much longer, which may give you time to figure out a way to pay your debts or work out a solution with your lender.
- Non-judicial: In non-judicial states, including California and Texas, when the borrower goes into default, the lender can put the house up for auction without filing any legal paperwork. This process is often faster than a judicial foreclosure because it doesn’t involve housing court. If a lender wants to foreclose on your home in a non-judicial state, it may happen sooner than the 120-day timeline, which is considered guidance, but is not a law.
Foreclosure and housing markets
Housing markets may influence whether a lender decides how fast to start foreclosure proceedings. In a strong market in which the lender will have no problem disposing of the property, or a municipality where the laws and the court docket favor the lender, the process may move much quicker.
By contrast, lenders may be more relaxed in a weak market or a hostile legal environment. Lenders really don’t want to have to seize and then sell your home—most would rather work things out with you.
How do missed mortgage payments impact my credit score?
Your lender can report missed payments to credit reporting agencies, which can hurt your credit score. How many points you lose varies, but generally, the higher your score, the larger the reduction.
| Credit score | Missed mortgage payments | Damage to score |
|---|---|---|
| Source: FICO | ||
| 793 | 1 (30 days past-due) | 63-83 points |
| 710 | 1 (30 days past-due) | 45-65 points |
| 607 | 1 (30 days past-due) | 17-37 points |
Note that if a mortgage payment is late by a few days past the grace period, it won’t result in a negative mark on your credit report. The reason is that in order to be reported, the payment must be at least 30 days overdue.
How can a payment plan help if I miss a mortgage payment?
Communication with your lender is key. If you reach out to inquire about a payment plan, you may get the chance to pay your overdue balance over time, or even be presented with alternatives. If you can arrange a payment plan, your lender will provide you with a fixed timeline to catch up on your payments. Repayment plans tend to run from two to six months (sometimes longer), during which your monthly payments increase to compensate for the balance that’s overdue. This arrangement, when followed properly, can help you to get current on your payments again.
If you can prove to your lender that your income has stabilized — or that you are capable of handling the larger payments temporarily — you may be able to avoid foreclosure. In addition to keeping your home, you can repay your overdue balance at a pace that’s agreed upon by you and the lender.
Bottom line
The ideal strategy is to make full and timely mortgage payments to avoid late fees or, potentially, foreclosure. If you find that late or missed payments are likely, call your loan servicer as soon as possible to explain your situation.
FAQ
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A deed in lieu of foreclosure is when a homeowner voluntarily transfers their property title to the lender to be released from their mortgage obligations. This alternative to foreclosure can be less harmful to the homeowner’s credit score and history, and sometimes includes relocation assistance or debt forgiveness. Acceptance of a deed in lieu is at the lender’s discretion.
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A short sale happens when a home is sold for less than the mortgage balance with the lender’s approval. It’s an option for homeowners facing financial hardship and a property value decline. While it can prevent foreclosure, it involves risks and may result in the lender either forgiving or pursuing the remaining debt.
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Preforeclosure is the period after a borrower defaults on mortgage payments but still retains ownership of the property, offering a chance to still make good on the debt. Foreclosure is the subsequent and more final phase of the process, in which the lender takes possession of the home and may sell it to recover the loan balance, forcing the current owner to leave the home.
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Foreclosure processes generally begin 3-6 months after the first missed payment. Federal law usually requires a homeowner to be more than 120 days overdue before starting foreclosure, but earlier action can occur if there’s no communication with the lender. It’s important to discuss alternatives with your lender or a housing counselor to avoid foreclosure.
