What Happens When You Miss a Mortgage Payment on Your Home?
Mortgage payments are not easy to make every month. The possibility of losing your home because you can’t make the mortgage payments can be terrifying. Perhaps you lost your job or you’re having trouble making ends meet. The Local Records Office in Bellflower, CA asks the question “What happens when you miss a mortgage payment?” This is a great question and just like many people would like to know it’s a very simple but complex answer. There are a lot of steps that need to be taken when the homeowners miss 1 or a couple of mortgage payments.
First Action That Will Be Taken When the First Mortgage Payments is Missed
When the first mortgage payment has been missed the homeowner(s) will get a “late payments” letter from the bank in the mail after 7 business days. If the letter is ignored or payment hasn’t been paid, other actions need to be taken.
If the homeowner calls the loan servicer and explains his or her situation, the loaner might give the homeowner a few weeks or even days to come up with the mortgage payments money, if after the few weeks have gone by drastic measurements have to be taken.
Second Month of Missed Mortgage Payments
After the second straight month of missing the mortgage payments, the late payments letters should be staking up in the mailbox. The homeowner should contact the bank to explain his or her financial difficulty but it’s up to the bank at this time to decide what needs to be done. After the second month, the bank is running out of patience. The correct thing the homeowner should have done was to save the most money for rainy days like this one. The homeowner needed to think ahead and realize that losing their job, family emergency, car problems are all part of the risks of being a new homeowner. The longer the homeowner waits to call the loan servicer the fewer options he or she will have.
The Third Month
After no mortgage payments have been made in over 3 months the best option is to contact the loan servicer to try to qualify for a loan modification under the Making Home Affordable Modification Program (HAMP). In order for homeowners to qualify for HAMP certain requirements are needed.
- Your home needs to be your only or primary residence;
- You owe your mortgage loaner less than $729,750 on your first mortgage;
- You got your mortgage you want to qualify for before January 1, 2009;
- Your payments on your first mortgage need to include; principal, interest, taxes, insurance, and homeowner’s association dues and is also 31% of your current gross income.
- You can’t afford your mortgage payments because you lost your job, financial hardship or and medical bills
If you think you meet these qualifications, contact your loan servicer as soon as possible. You will need to provide your loan servicer with the following documents;
- The most recent pay stubs or any income of your household
- The most recent copies of original documents of your income tax returns
- Assets information if you own any
- Any type of savings in the bank
- The most monthly mortgage statement you could provide
- If you have a second mortgage or home equity line you need to provide that too
- Most recent credit card balance(s) if any
- If you’re making monthly payments to other debts like credit cards, student loans, child support or car loans bring that in too
- A completed “Hardship Affidavit” application describing your economic hardship in detail explain your circumstance
Even if you don’t have all the required documentation you should still try to apply, because the bank and the loan servicer will take it as you are neglecting the mortgage payments on purpose.
After the Fourth Month
After the fourth month, you should be doing everything possible to avoid your bills piling up and being sent to foreclosure. By this time your loan servicer should tell you if you qualified for HAMP if you did he or she will set a date for you to pay the full amount including 3-4 months of the late mortgage, late fees, interest, and penalties, by the date you both have agreed on.
The Repayment Plan
Your servicer gives you a fixed amount of time to repay the amount you are behind by adding a portion of what is past due to your regular payments. This option may be appropriate if you’ve missed a small number of payments.
The worst thing that could happen to a homeowner is to lose the home after paying the mortgage for months and months and a large down payment.