Have you already missed one or more of your mortgage payments? Or are you at risk of missing a payment soon, because of a change in your financial circumstances? If so, then you may be at risk of losing your home due to foreclosure. Fortunately, the process of foreclosure takes several months from beginning to end. It won’t just happen overnight. The time frame is a little bit different in each state, but here’s an idea of what might happen during each month at the beginning of a typical foreclosure process.
Month Number One – Missing your first month’s payment will result in a letter and maybe a phone call from your lender to inform you that your mortgage payment was not received. At this time, you can seek help from a housing counselor.
Month Number Two – Once you miss your second mortgage payment, the bank will start calling you to find out what’s going on and why you have not been paying. Avoiding the phone calls will not help you. You should speak to your bank and explain to them your financial situation and what you are doing about it. It might be possible to make a partial payment to avoid falling further behind schedule.
Month Number Three: If you miss a third payment in a row, you will receive a “demand letter” or “notice of acceleration” from the bank. This letter is formal notification telling you that you have 30 days to pay all the amounts past-due in order to restore your mortgage to current status. Unless you pay in full within 30 days, or make other suitable arrangements with your lender, they will begin the formal proceedings to start foreclosure. At this point, they are unlikely to accept payments less than the total amount that is due.
Month Number Four – After the fourth month has passed, you have reached the end of the 30 day period stated in the Demand Notice. Unless you have paid in full, foreclosure proceedings will begin and you will be contacted by the bank’s attorneys. At this stage, you’re also responsible for paying all the required legal fees on top of the loan amount.
The above foreclosure process applies to primary mortgages only. Second mortgages follow a different time line because they are different types of loans.