Under normal circumstances, you might miss four mortgages before foreclosure. But it also depends on several factors, including your lender’s specific policies and the real estate market. However, (during the COVID19 pandemic) the federal government has protected mortgages guaranteed by the Federal Housing Administration (FHA) or supported by Fannie Mae or Freddie Mac against foreclosure for 60 days.
Your Lender’s Policies
The practices and policies of your lender will impact how long you can go without paying before being forced into repossession. Lenders may be lenient to missed payments or make concessions to individual borrowers if they have a large number of low-risk mortgages. Generally, such lenders will inadvertently forgive missed payments and may not disclose your situation to the authorities until you continue to miss payments.
The foreclosure is more likely to begin even after two delayed payments if the lender has a portfolio of high-risk loans. Therefore, the standard procedures may be initiated due to the overall default risk of the lender’s mortgage group, even if you are a low-risk borrower.
Real Estate Market Factors
The general state of your local housing market is another factor that affects the timing of foreclosures. You may stay longer in your home when your county or area has pending foreclosures. The housing authorities and courts may be backlogged and lack the resources to handle so many cases at a time. There have been instances in such conditions; where individuals have missed ten or more monthly installments before losing their properties.
Your mortgage servicer contacts you multiple times and alleviates the situation if you default on your payments. Typically, the lender will contact you by phone on the 36th day after your last payment. By the 45th day after you missed the repayment—your mortgage servicer may contact you in writing with information about your options.
Typical foreclosure schedules
Although circumstances and locations may determine changes in foreclosure schedules, there is a pattern that shows how this usually happens:
- You are considered a mortgage defaulter if you miss the second installment. Also, you may notice a change in a mortgage service provider when you default on your second payment.
- It will usually end up being more assertive in the way it deals with you. This can be a frightening situation, but you can still negotiate with the lender. Furthermore, without complicating foreclosure procedures,the financial companies intend to get your funds because this is more profitable for them. It means they would like to make an arrangement with you for repayments if possible.
- By 90 days, if you don’t reach an agreement with your mortgage lender and miss three mortgage installments. It is really a serious situation. You will receive a letter or email from the mortgage lender specifying you have 30 more days for updating your escrow account. You need to communicate with the loan provider to avoid repossession procedures if you want to stay in your home. They will generally expect full repayment of the borrowed amount; however, you may still negotiate to reach the desired payment plan.
- The foreclosure will begin after the 30th day when borrower would not fulfilled agreement conditions and monthly repayments. So, it is considered that you missed four monthly mortgage installments at this point.
Regulations governing foreclosure may vary from state to state. In some states, mortgage lenders would consult with the borrower before registering for foreclosure.
COVID-19 Provisions on Foreclosure
The termination of all new repossessions and suspension of foreclosures on FHA-insured mortgages would take place according to new guidelines of the federal government.
Homeowners affected by the coronavirus crisis can apply for mortgage forbearance. It can ultimately reduce or suspend mortgages for up to a year without incurring fines or late fees. In addition, lenders will not report debtors’ payments to credit bureaus following the new forbearance plan.
The Bottom Line
Your best bet is to communicate with the lending institution and discuss your scenario when you encounter repossession. They may have programs that assist in maintaining property or residence as COVID-19 affects the majority of people. Visit our website RateChecker.com to learn more about mortgages and the latest rates.