Under normal circumstances, the number of payments you can miss on your mortgage is four before the foreclosure process begins, but this also depends on a number of factors, including your lender's particular policies and the housing market.
However, during the COVID-19 pandemic, the federal government has protected mortgages insured by the Federal Housing Authority (FHA) or backed by Fannie Mae or Freddie Mac against foreclosure for 60 days.
- While the number of missed mortgage payments that will lead to foreclosure can vary, typically after four missed payments foreclosure will begin.
- During the COVID-19 pandemic, foreclosures have been temporarily suspended for up to 60 days.
- If you are having difficulty making your mortgage payment, the most important thing you can do is remain in open communication with your lender.
Your Lender's Policies
The practices and policies of your specific lender will affect how long you can go without paying before being forced into foreclosure. If your lender has a large portfolio of low-risk loans, it may be more lenient regarding missed payments or might make allowances to individual borrowers. Often, such a lender will forgive an occasional missed payment and may not refer your situation to the housing authorities until you continue to miss more payments.
If the lender has a portfolio of high-risk loans, however, the possibility of foreclosure proceedings beginning even after just two missed payments is higher. Even if you are a low-risk borrower, the proceedings may be triggered by standards due to the overall default risk of the mortgage pool owned by the lender.
Mortgage lending discrimination is illegal. If you think you've been discriminated against based on race, religion, sex, marital status, use of public assistance, national origin, disability, or age, there are steps you can take. One such step is to file a report to the Consumer Financial Protection Bureau or with the U.S. Department of Housing and Urban Development (HUD).
Housing Market Factors
The general state of your local housing market is another factor that plays a role in the timing of foreclosure proceedings. If the neighborhood or region has many pending foreclosures, it is likely you will be able to stay in your home longer, as local housing authorities and the courts may be backlogged and lack the resources to process so many cases at once. In such situations, there have been cases where people have missed 10 or more monthly payments before finally losing their homes.
If you are in default, your mortgage servicer should contact you multiple times to attempt to alleviate the situation. Typically, by the 36th day after your last payment, the lender contacts you by phone. By the 45th day after you miss a payment, your mortgage servicer must contact you in writing and provide information regarding the options available to you.
Although most lenders and services will not begin the foreclosure process over a single missed payment, missing even one mortgage payment does put you in breach of your mortgage agreement. That’s why it’s so important to communicate with your lender if you are going to be late on a payment or miss a payment.
Typical Mortgage Foreclosure Timeline
While circumstances and location can dictate variances in the timeline of mortgage foreclosure, there is a template for how it usually happens:
- A 15-day grace period is common. If you pay within this time, you’re all good. If you fail to pay, and then miss another payment, things get more complicated. Late fees can be added, and your lender may report you to the credit bureaus, which will harm your credit score.
- Once you miss the second payment, you’re in default. If you miss a second mortgage payment, you’re likely to see a change in the mortgage servicer. It will normally become more assertive in the way it deals with you. This can be a frightening situation to deal with, but you still may be able to reach an agreement with the lender. No matter the circumstances that led to a missed mortgage payment, you should remember that mortgage companies want to get their money without a messy foreclosure process if possible; it’s more cost-effective for them. This means they'd like to make an arrangement with you for payment if possible.
- By 90 days, if you don’t come to an agreement with your mortgage lender, and you miss three mortgage payments, it is a serious situation. You will receive a letter from the mortgage lender stating you have 30 more days to bring your account up to date. If you want to stay in your home, you need to speak to the lender in order to try and avoid foreclosure proceedings. They will normally expect full payment of the money that’s owed, but you may still be able to reach a payment arrangement.
- Once the 30-day has ended, if there has been no payment made and no agreement reached, foreclosure starts. By this point, you're at four missed monthly mortgage payments.
Laws governing foreclosure can vary from state to state. In some states, mortgage lenders must meet with borrowers before they can file for foreclosure.
Under new guidelines from the federal government, all new foreclosures will be stopped and in-progress foreclosures will be suspended for FHA-insured mortgages. Foreclosures and evictions on mortgages backed by Fannie Mae and Freddie Mac (about two-thirds of all mortgages in the U.S.) are now suspended until at least June 30, 2021, due to an executive order signed by President Biden on his first day in office.
Homeowners who are financially affected by the coronavirus crisis can request mortgage forbearance, which can lower or suspend their payments altogether, for up to a year. In addition, during this time, no penalties or late fees will be applied and lenders will not report delinquent payments in a forbearance plan to credit bureaus.
The Bottom Line
If you're facing foreclosure, your best bet is to stay in communication with your lender and talk with them about your situation. They may have programs to help you keep your home, especially if you have been financially impacted by COVID-19.