What Happens If You Miss a Mortgage Payment?

Missed Mortgage Payment Timeline

A missed mortgage payment moves through the same stages for almost every home loan, because the key deadlines come from federal rules and from the standard terms in most mortgage notes.

When Does a Late Fee Start?

A late fee usually starts when the payment is still unpaid at the end of the grace period written into your mortgage note, which is often 15 days after the due date. The amount is also set by the note, within limits set by federal rules for some loans and by state law.

For FHA-insured loans, the HUD rule on late charges caps the fee at 4% of a payment that is more than 15 days late (24 CFR 203.25). On a $1,800 payment, that is a fee of up to $72. Some states set their own limits, which are covered with examples in the guide to the mortgage grace period.

Most servicers count a payment as received when it arrives, not when you mail it. Paying online a few days before the grace period ends avoids a fee caused by a slow mail delivery.

When Does a Missed Payment Hurt Your Credit?

A missed mortgage payment can hurt your credit once it is 30 days past due, because that is when servicers usually report it to the credit bureaus as late. The CFPB says this plainly in its homeowner’s guide to success, which notes that a loan 30 days past due may be reported and that one late payment can lower your score.

Each month you stay behind adds a new late mark, at 60, 90 and 120 days. Those marks can stay on your credit report for 7 years under the Fair Credit Reporting Act (15 U.S.C. 1681c), even after you catch up. How a full foreclosure affects your credit, and how long it lasts, is covered in how long a foreclosure stays on your credit.

What Will Your Servicer Do?

Your servicer must reach out to you early, because federal rules require it to offer information about help before the foreclosure process begins. The CFPB’s early intervention rule sets two deadlines (12 CFR 1024.39):

• By the 36th day: the servicer must try to talk with you live, by phone or in person, and tell you about help options if they apply.
• By the 45th day: the servicer must mail a written notice with a phone number for its staff, examples of the options it offers, how to apply and how to find a HUD-approved housing counselor.

Your monthly statement also changes. Under the rules on mortgage periodic statements, once you are more than 45 days behind, the statement must show the date you fell behind, the payments you missed and a warning about the risks, such as fees and foreclosure (12 CFR 1026.41(d)(8)).

When Can Foreclosure Start?

Foreclosure can start only after you are more than 120 days delinquent on most home loans, because federal rules give you a waiting period before the first filing. The CFPB’s loss mitigation rule calls this a pre-foreclosure review period, and it gives you about 4 months to apply for help before any foreclosure notice or lawsuit (12 CFR 1024.41(f)).

The first foreclosure step is different by state. In some states it is a lawsuit filed in court. In others it is a notice of default recorded in the county records. Either way, there are usually several more months between that first step and an actual sale. To see the full sequence and timeline where you live, look up your state on the foreclosure process by state page.

If you send a complete help application before the servicer makes that first filing, the servicer cannot start the foreclosure until it has reviewed you and the review is finished. That protection, and the others tied to timing, are listed in loss mitigation deadlines.

How Do You Catch Up After Missing Payments?

You can catch up after missing payments by paying the full amount at once, spreading it over a few months, or moving it to the end of the loan, depending on what you can afford. The right choice depends on whether your money problem is over or still going on.

• You can pay it all now: pay the past-due amount and fees, which is called reinstating the loan.
• You can pay a little extra each month: ask for a mortgage repayment plan, which adds part of the missed amount to your next few payments.
• You need a break: ask for forbearance, which pauses or lowers payments for a few months. The difference between pausing and moving payments is explained in forbearance vs deferment.
• Your income is lower for good: ask for a loan modification, which changes the loan so the payment fits your new budget.