The mortgage delinquency rate has shot up significantly due to the economic turmoil brought about by COVID-19. If you are finding yourself falling behind on mortgage payments, read on to find out how long can pass before a house goes into foreclosure. If you find yourself facing foreclosure, our legal experts would be happy to provide you with a free consultation – simply fill out our contact form.
When Is a Mortgage Payment Late?
When you purchased your home, one of the documents you signed off on was a promissory note. This important legal document outlines the monthly payment owed, when payments are due, and to whom the payments must be sent.
The promissory note will also explain what happens if you don’t pay your mortgage when it is due. If you aren’t sure when exactly your mortgage is due, simply take a look at the promissory note. Most mortgage payments will be due on the first day of each month. If you don’t turn it in on that date, your payment is technically late. But don’t panic! Lateness doesn’t necessarily mean you will suffer consequences.
Most mortgages have an inbuilt grace period where you can make a late payment without a penalty. Typically, this period is 15 days, so you can make a payment up until the 16th without penalty. If you turn it in after that, a late fee may be incurred.
When Does Foreclosure Happen?
This depends on the state in which you reside. In New York, a loan servicer or lender may not file for foreclosure until 120 days have passed from a missed mortgage payment. This time frame allows the delinquent borrowers time to explore their loss mitigation options.
However, there is currently an ongoing moratorium on foreclosures and evictions in New York, under Governor Cuomo’s orders. This doesn’t mean that you should relax if you are behind on your mortgage payments – consider this as an extension of the loss mitigation phase.
Keep in mind, also, that being late on your mortgage isn’t the only thing that could initiate a foreclosure. If you are late on your property taxes, this could also cause you to lose your home. However, property tax lien sales in NYC are also postponed.
What Causes A Mortgage Foreclosure?
Some of the most common reasons for mortgage foreclosures include:
- Negative equity. This is where a home’s value falls, and the homeowner then owes more on the mortgage than the actual value of the home. Sometimes, this is referred to as an “underwater” mortgage.
- Rising interest rates. Some homeowners have subprime mortgages, in which interest rates are initially low and then reset at very high values just a few years down the road. When this happens, homeowners may not be able to afford their payments.
- The 5 D’s. This common phrase refers to death, divorce, disease, drugs, and denial – all of which can lead to financial hardship and, thus, missed mortgage payments.
How Many Missed Payments Before Foreclosure?
Because lenders have to wait 120 days before filing for foreclosure, this equates to four missed payments. However, the actual process of foreclosure can take months to years to come to completion. Because New York is a judicial foreclosure state, the foreclosure goes to court and follows a very structured process – lengthening the process but also giving borrowers more time for the loss mitigation step.
First Missed Mortgage Payment
When you are 30 days late on your mortgage, the lender may choose to report the delinquency to a credit bureau. Federal law requires the loan servicer to attempt to contact you by the 36th late day. If you don’t respond to this, you may receive a notice of default – which gives you 30 days notice to pay the mortgage balance and any accumulated interest.
Second Missed Mortgage Payment
At this point, you have likely been penalized with late fees twice and received multiple calls from your lender. There will still be opportunities for you to discuss this with your lender; they may be able to refer you to helpful resources.
Third Missed Mortgage Payment
After missing three payments, your lender may send you a Notice to Accelerate. This notice tells the borrower that they must catch up on their mortgage and penalties or face foreclosure.
Fourth Missed Mortgage Payment
Once four payments (120 days) have passed, the lender may begin the foreclosure process in New York. After a settlement conference, if no agreement is struck, the case will go to court for judgment. If you are unsuccessful, the property will be put up for public auction.
For further details on the foreclosure process and how to stop it, read this article.
How Long Before I Have to Move Out of My House?
As we mentioned before, evictions have been halted until further notice. However, outside of the current circumstances, you would not have to leave your house until after the house is sold to a new owner. You will receive an eviction notice outlining how much time you have before you need to leave.
Catch Up on Missed Payments
The best way to halt foreclosure proceedings is to catch up on your missed payments and penalties. We’ve outlined a few ways to do so.
This is when you take out a new loan in order to pay off your first mortgage. This can allow you to take advantage of a lower market interest rate or to lower your monthly payment.
This changes the terms of an existing loan – for instance, the interest rate may be reduced or the repayment time may be extended.
With this, your lender will temporarily allow you to pay a lower mortgage amount until you get on your feet.
The lender decreases the amount that a borrower owes on a home, thus lowering the monthly mortgage payments accordingly.
Getting Help From a Foreclosure Attorney
You don’t have to face foreclosure alone. Reach out to our legal experts by filling out the contact form; we will provide you with a free consultation. Foreclosure attorneys can guide you through the process, help you prepare defenses for your case, and show you what legal rights you have.
Yes; you can halt the foreclosure sale by paying the outstanding balance and any accrued penalties. However, some states require this to be done a certain number of days before the sale. Other states will let you pay the overdue amount afterwards and reverse the sale.
Some mortgage companies may attempt to reject payments. If this happens to you, bring it to court as a foreclosure defense.
As long as you pay within the mortgage grace period, there is no ideal day of the month to do so.
No; when possible, mortgage companies will work with the borrower to work out a plan. Foreclosures are a long and expensive process.