As borrowers fall behind in their payments, they can expect lenders to react in specific ways at specific times. Here’s a look at the time line from late payment to foreclosure.
It’s the first of the month, and the mortgage payment is due. The borrower misses the payment.
Day 16 to day 30
A late charge is assessed on payment.
The company that processes the borrower’s payments (called the mortgage servicer) starts attempting to make contact to find out what happened.
Day 45 to day 60
The servicer sends a “demand” or “breach” letter to the borrower pointing out that terms of the mortgage have been violated.
The borrower is given 30 days to resolve the situation by paying the delinquent amount.
Day 90 to day 105
The servicer refers the loan to its foreclosure department and hires a local attorney or other firm to initiate foreclosure proceedings.
Depending on the state where the home is located, the servicer’s representative may record a formal notice of foreclosure at the local courthouse, publish details of the debt in the local newspaper, attend hearings on the case and make appropriate court filings.
Day 150 to day 415
The house is sold at a foreclosure sale or auction. The wide time range is due to different state requirements.
Borrowers in states with judicial foreclosures, or those in which lenders have to retake property titles via the court system, can get almost a year to straighten out their affairs before the sale. Those in nonjudicial states have as little as two months.
Day 150 to day 415 and on
After the sale, some states grant borrowers a “redemption period” in which they can still repurchase the property if they have the money. Others force consumers out immediately following the auction.