Serious Delinquency

What Is a Serious Delinquency?

A serious delinquency is when a single-family mortgage is 90 days or more past due and the bank considers the mortgage in danger of default. Once a mortgage is in default, a lender may initiate foreclosure proceedings.

Key Takeaways

  • "Serious delinquency" refers to any outstanding balance owed on a mortgage when it becomes 90+ days overdue.
  • A past-due mortgage is considered a sign to the lender that the mortgage is at high risk for defaulting.
  • If a borrower defaults on a serious delinquency, they may be forced into foreclosure by their lender.

Understanding Serious Delinquency

In some cases, those who are in a serious delinquency can work with their lender to work out a compliancy plan. Borrowers who are delinquent in making their mortgage payments should contact their lender to see what options other than foreclosure exist. Foreclosure is time-consuming and expensive for a lender, and in certain situations the lender might offer options other than foreclosure to save themselves time and money. Some of these options include forbearance, deed in lieu of foreclosure, loan modification or a short refinance.

A serious delinquency can also be referencing to any form of delinquent payment, such as a late credit card or late loan payment. Every creditor or lender will have their own definition of what constitutes a serious delinquency, although 30, 60 or 90 days past-due is generally considered to be a serious delinquency.

Statistics on how many home mortgages are in serious delinquency are tracked by analysis companies such as Loan Performance Insights Report from CoreLogic. Delinquencies are often tracked as early-stage or late-stage delinquencies.

Example of Serious Delinquency

As an example of how a serious delinquency could happen, the Smith Family purchases a home with a value of $400,00. After a down payment of $80,000, the Smith Family takes out a home mortgage with Fannie Mae for the remaining $320,000. However, after paying the first couple months of their mortgage, both Mr. and Mrs. Smith lose their jobs and are unable to complete the mortgage payments. They miss one month of their mortgage payment, which warrants a call and an official letter sent from their lender.

After missing a second month, another call and letter are sent to the Smiths warning them that they are about to enter serious delinquency status, under which they will be moved to foreclosure if they continue to ignore payments and any resulting late payment fees. After reaching 90 days past due on their mortgage, the Smith Family officially enters serious delinquency and their mortgage is moved to foreclosure. The family is notified via phone, email and official letter of their serious delinquency status.