Delinquent Mortgage

DEFINITION of 'Delinquent Mortgage'

A home loan for which the borrower has failed to make payments as required in the loan documents. If the borrower can't bring the payments on a delinquent mortgage current within a certain time period, the lender may begin foreclosure proceedings. A lender may also offer a borrower a number of options to help prevent foreclosure when a mortgage becomes delinquent.

BREAKING DOWN 'Delinquent Mortgage'

Foreclosure is a last resort for lenders, because it is an expensive procedure and lenders typically lose money in foreclosure proceedings. A forbearance agreement is a potential alternative to foreclosure if the borrower's financial difficulties are temporary. Under a forbearance agreement, the lender temporarily allows the borrower to stop making payments or to pay less than the usual monthly payment.

A homeowner with a delinquent mortgage, who doesn’t think his financial difficulties are temporary but who wants to avoid foreclosure, might convince the bank to agree to a short sale. This occurs when the borrower cannot sell the home because he owes more than the home is worth, so the bank agrees to allow the borrower to sell the house for less than the mortgage balance. In some states, the bank will forgive the difference; in others, the homeowner must repay the difference.

A borrower who has been delinquent for several months or even years, but who has not been foreclosed on, may agree to a repayment plan with the lender so that he/she will eventually be current on the mortgage and will not lose the home. The lender might also agree to modify the loan by changing the principal owed, the loan term and/or the interest rate so that the borrower can afford the monthly payments.

RELATED TERMS
  1. Serious Delinquency

    When a single-family mortgage is 90 days (or more) past due and ...
  2. Mortgage Forbearance Agreement

    An agreement made between a mortgage lender and delinquent borrower ...
  3. Foreclosure - FCL

    A situation in which a homeowner is unable to make principal ...
  4. Foreclosure Action

    The legal proceedings initiated by a lender in the case of mortgage ...
  5. Short Refinance

    The refinancing of a mortgage by a lender for a borrower currently ...
  6. Mortgage Short Sale

    The sale of a property by a financially distressed borrower for ...
Related Articles
  1. Professionals

    Helping Clients Navigate Short Sales And Foreclosures

    Both buyers and sellers can benefit from a real estate professional experienced in dealing with short sales and foreclosures.
  2. Options & Futures

    Saving Your Home From Foreclosure

    Learn the tactics you can use to prevent your home from being repossessed.
  3. Personal Finance

    Avoiding Foreclosure Scams

    If you want to save your home, avoid bogus offers and take matters into your own hands.
  4. Home & Auto

    How to Work With Your Lender if You Can't Pay Your Mortgage

    Homeownership is a dream but when you can't pay your mortgage it becomes a nightmare. In the wake of the housing meltdown lenders are more willing to help.
  5. Home & Auto

    Top 6 Mortgage Mistakes

    These common errors could end in foreclosure.
  6. Credit & Loans

    How Regulations Protect Reverse Mortgage Borrowers

    They're complex animals, which is why there are government guidelines in place to protect borrowers.
  7. Active Trading Fundamentals

    Short Sales And Foreclosures: When It's Time To Move On

    Sometimes it's better to cut your losses, but foreclosures and short selling can have devastating impacts on your credit score.
  8. Home & Auto

    Mortgage Options For Underwater Homeowners

    Find out what options are available when your mortgage is greater than the value of your home.
  9. Home & Auto

    Homebuyers' Walkthrough: Obtaining A Mortgage

    A mortgage is a pledge of real property as security for the payment of money, and today's homebuyers have a variety of options in terms of lenders and loan types. Obtaining a mortgage can be ...
  10. Home & Auto

    What to Do When You Can't Pay Back Your HELOC

    Home equity lines of credit can be a cheap way to tap the equity in your home, but will you risk losing your home if you can't make the repayments?
RELATED FAQS
  1. What's the difference between short sales and foreclosures?

    Understand the difference between a short sale and a foreclosure; both result in the loss of a home, either through a sale ... Read Answer >>
  2. What’s the difference between a mortgage lender and a mortgage servicer?

    Buying a home is an exciting and confusing process. Once the loan is secured, it's important to know who gets the payment: ... Read Answer >>
  3. What is PMI, and does everyone need to pay it?

    Also known as "Primary Mortgage Insurance," PMI is the lenders (banks) protection in the event that you default on your primary ... Read Answer >>
  4. My mortgage payments are no longer affordable; is there anything that I can do to ...

    The most important thing for you to remember if you find that you may not be able to make this month's mortgage payment is ... Read Answer >>
  5. How does the loan-to-value ratio affect my mortgage payments?

    Understand what the loan to value ratio is, how the ratio is calculated and learn how it has an impact on your mortgage payments ... Read Answer >>
  6. What is the 1003 mortgage application form?

    Learn about the 1003 mortgage application form, what information it requires and why this form is the industry standard for ... Read Answer >>
Hot Definitions
  1. Law Of Demand

    A microeconomic law that states that, all other factors being equal, as the price of a good or service increases, consumer ...
  2. Cost Of Debt

    The effective rate that a company pays on its current debt. This can be measured in either before- or after-tax returns; ...
  3. Yield Curve

    A line that plots the interest rates, at a set point in time, of bonds having equal credit quality, but differing maturity ...
  4. Stop-Limit Order

    An order placed with a broker that combines the features of stop order with those of a limit order. A stop-limit order will ...
  5. Keynesian Economics

    An economic theory of total spending in the economy and its effects on output and inflation. Keynesian economics was developed ...
  6. Society for Worldwide Interbank Financial Telecommunications ...

    A member-owned cooperative that provides safe and secure financial transactions for its members. Established in 1973, the ...
Trading Center