How Late Do You Have to Be on Your Mortgage Payments Before a Bank Will Start Foreclosure Proceedings?

Written by James Hirby and Fact Checked by The Law Dictionary Staff  

You might be surprised to learn that your home won't immediately be subject to foreclosure after making a single late mortgage payment. Despite the horror stories that you may have heard about unforgiving mortgage lenders and unsympathetic local housing authorities, the reality of foreclosure is quite a bit messier. In many cases, you may be able to remain in your house for months before being kicked out by your bank or sheriff.

This is because the housing market continues to work through the rash of foreclosures that swept the country in the aftermath of the recent housing crisis. For several years in a row, millions of American homeowners struggling with rising mortgage rates and declining take-home incomes became unable to remain current on their mortgages. In the beginning, the lenders that underwrote their mortgages were able to keep up with the slight uptick in foreclosure rates.

However, the main wave of delinquencies that hit between 2007 and 2010 proved to be overwhelming for most of the hardest-hit lenders. In economically-depressed states like Florida and California, hundreds of thousands of homes formed a massive foreclosure backlog that remains problematic today. Many thousands of foreclosed homes were sold at below-market rates simply to clear the way for a new crop of delinquent properties. Although many property investors were able to snap up discounted properties at these auctions, the mortgage industry collectively suffered hundreds of billions of dollars in losses.

This situation has not yet been fully controlled. Under normal circumstances, you would be at risk for bank seizure within two months of making your last mortgage payment. Today, you might be able to wait as long as six months before being required to find a new place to live. The exact amount of time that you'll be able to remain in your home will depend upon the condition of the housing market in your area. Since foreclosure statistics are typically broken down by county, you should familiarize yourself with the foreclosure rates in your home county. If your local housing market is depressed, you may not be pursued for your delinquency for up to a year.

This extended grace period might give you time to catch up on your mortgage payments. If you became delinquent on your loan after a temporary job loss, you may be able to save your home by finding a new job and presenting a new repayment plan to your mortgage lender.

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