- Job loss
- Overlooking a due date (forgetting)
- No money
- Failure to prioritize bills
Well, in this article, we offer guidance and answers in regards to missing monthly payments, foreclosures, and other consequences.
What is a foreclosure?
This refers to action whereby mortgaged property is taken into possession as a result of failing to remit monthly mortgage payments. As you already know, once you sign a mortgage, you agree to pay the lender in full. When you fail to remit monthly payments, it means you have breached the contract. As such, the lender is entitled to repossess your home in an effort to recoup their investment.
How Many Mortgages Can I Miss Before Foreclosure?
Legally, 120 days is the amount of time allowed before the mortgage lender begins with the foreclosure process. It is important to understand that the more payments you miss, the more you inch closer to foreclosure.
Normally, when you miss your first payment, the mortgage lender offers a grace period of 15 days. This duration is extended to homeowners as additional time to allow him or her remit the monthly payment. If the grace period lapses before the borrower remits the monthly payment, the mortgage lender charges a late fee usually 2% to 5% of the monthly payment.
When the borrower misses the second monthly payment, the mortgage lender considers this as a default. As such, the lender will take measures to find out why you have not remitted your monthly payment. When contacted, it is important to take this opportunity and explain to the lender why you are unable to remit the first and second payments.
If you miss the third monthly payment, the lender will issue a demand letter. The demand letter will inform you that you are now a delinquent and have 30 days to settle the three monthly payments. If you are unable to make the monthly payments, the mortgage lender will begin with the foreclosure proceedings. Since 120 days are not over yet, you still have time to negotiate with your mortgage lender. While the mortgage lender will listen to you, they will not take less than the full payment.
After 120 days have elapsed, the lender will now legally initiate the foreclosure proceedings. The first step is where you are referred to the lender’s attorneys. Since you have already been declared a delinquent, you are required to settle any legal fees incurred. One thing you need to know is that you still have a chance to avoid foreclosure. All you have to do is take steps to make the payments. Alternatively, you can work out something with the mortgage lender.
What Happens During The Foreclosure Process?
Well, the first step involves the recording of a Notice of Default. This gives you 90 days to remit your monthly payments to the mortgage lender. If you have not paid your payments after 90 days, the mortgage lender will record a Notice of Sale. This will be sent to you as mail and will also be published in the newspaper or in a public place.
If 21 days elapse after the Notice of Sale, your house will be auctioned. As such, you will lose your home. What you need to know is that you can avoid foreclosure by making the first 3 monthly payments. Don’t wait until 120 days have elapsed. If you are experiencing financial problems, talk with your mortgage lender or a financial professional. You can benefit a lot from the advice offered by a financial professional.
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