A missed mortgage payment can become very serious if it is not addressed quickly. If you are late on a payment, there is usually a 15 day grace period in which you can still make the payment without incurring late fees or being reported to a credit bureau. However, once you are 30 days past due, you are considered in default on your mortgage. You will be required to bring your payments up to date and there may be penalties or late charges added to your account, which may be substantial. Additionally, your FICO score can drop dramatically if you default on a mortgage payment.
Typically, foreclosure proceedings will not be invoked until you are 120 days, or three months, past due in your mortgage payments. However, the laws vary from state to state and lender to lender. Depending on where the property is located, you may be subject to a judicial foreclosure or a non judicial foreclosure. Judicial foreclosures require a court action before foreclosure can take place, whereas the latter requires no judicial process.
After 120 days, a notice of default may be filed with the county and the bank may begin foreclosure proceedings. If the bank forecloses on your mortgage, they will take possession of the property. At this point, you will be forced to vacate the home and you will surrender any title to it. If you owe more on the home than the actual value of the property, the bank can also pursue a deficiency judgment against you - meaning that you not only lose ownership of the home but you might still owe the bank money for it as well!
If you think you are going to be late on a payment and you have no financial resources to make it in a timely manner, talk to your lender as soon as possible. Most lenders are willing to help you to set up a payment schedule if you show good faith in trying to keep current on your payments. In most cases, banks would rather work with you to avoid default than go through the process of foreclosure.
