A federal foreclosure moratorium was to sunset at the end of March, but President Joe Biden has extended this pandemic relief measure until June 30.
This moratorium impacts all home loans insured by Freddie and Fannie Mac.
However, in normal times, what happens when you miss a mortgage payment can vary wildly depending on local and other factors.
But one thing is for sure; you should stay in communication with your lender and be forthright in describing your financial situation.
In the following article, we’ll discuss what happens after missing a mortgage payment and when you can expect foreclosure proceedings to start.
A Lender’s Rules
If your lender specializes in high-risk loans, they might not be as forgiving with missed payments as a company that generally deals with low-risk ones.
A high-risk holding company may only allow you to miss two payments before they initiate a foreclosure proceeding.
On the other hand, a company with a more stable portfolio may let a borrower go four or five payments before recommending a foreclosure. And they might forgive some of a borrower’s late-payments under specific circumstances.
Your best bet is to check the fine print in your mortgage for stipulations.
Remember, most lenders would rather have you steadily paying back the loan than dealing with the lengthy and potentially expensive foreclosing process on your property.
A lender will find it undesirable to foreclose in an area where several homes are already going through the process.
If a region has a ton of ongoing foreclosures, lenders have been willing to let more missed mortgage payments back up. Authorities on the local level don’t have the resources to process an avalanche of foreclosures all at once.
In some cases, borrowers in these areas had missed as many as 10 payments before the foreclosure process was able to start in earnest.
In general, you should have a 15-day grace period if you happen to miss a mortgage payment. Once you miss the second payment, you could see a change in lenders. This new lender is typically more aggressive and will reach out to you first by phone and then in writing about your missed payments.
This article explains the process on the local level.
Communication Is Key
Your best bet is to let your lender know what is happening with you financially. You may find that your lender has a program for people in your circumstances.
Also, your lender may help you get in touch with outside programs for assistance.
The Department of Housing and Urban development has one such program. This scheme helps people who have missed at least one mortgage payment.
Also, many state programs are out there for people who need short-term and long-term housing assistance.
You should check with your local housing agency for specific programs to help you and the regional variances that govern foreclosure. They’ll be the most knowledgeable about foreclosure proceedings in your area.
What Happens if You Miss a Mortgage Payment? It Is up to You
Even with federal foreclosure moratoriums, those missed payments will need to be addressed at some point.
And you can directly affect what happens if you miss a mortgage payment. So do your research on the terms of your loan. And don’t forget to contact your lender. There’s a good chance they’ll be looking to help you with your financial struggles.
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