How Many Late Payments Can I Make Before the Bank Starts Foreclosure?

There is no set number of late payments that starts a foreclosure. What counts is how far behind you are. Federal servicing rules generally bar your servicer from making the first foreclosure notice or court filing until you are more than 120 days delinquent, which is about 4 missed monthly payments. Before that, a missed payment brings a late fee once the grace period in your note ends (15 days on FHA and VA loans) and a mark on your credit report once it is 30 days late.

What happens on each day after a missed payment?

The clock starts on the due date of the oldest payment you have not made. Under federal rules, you are delinquent from that date even if your note gives you a grace period before the late fee.

A complete application for help, called a loss mitigation application, that the servicer receives before that first filing stops the servicer from filing until you are found ineligible for every option and any appeal is over, you turn down every offer (the servicer may treat failure to accept by its deadline as rejection), or you stop making the payments under an option you accepted. The 120-day wait also applies to small servicers, those that service 5,000 or fewer loans, all made or owned by them or an affiliate.

How much is a late fee?

Your note states the grace period and the fee as a percentage of the overdue payment. Federal and state rules cap it for some loans:

The New York cap comes from N.Y. Real Property Law section 254-b. The standard Fannie Mae and Freddie Mac note figures the fee on the overdue principal and interest and charges it only once on each late payment. On $2,000 of monthly principal and interest, a 4% fee is $80 and New York's 2% cap is $40. Older FHA loans can figure the fee on the full payment, including escrow, if the note allows.

Why does paying late keep you behind?

Paying a few days late each month is different from missing a payment. A payment made after the grace period brings a fee, but it is not reported unless it is 30 days late, and it brings you current, so it never moves you toward the 120-day line.

Missing a payment entirely is harder to undo. Federal servicing rules show the effect when a servicer applies each payment to the oldest one due. Suppose payments are due on the 1st and you skip January. On January 31 you are 30 days delinquent. If you pay one payment on February 3, it covers January, but February is now unpaid, so on February 4 you are 3 days delinquent. You stay behind, and keep collecting late fees, until you make an extra payment. If you skip a second month, the gap grows to two payments and the delinquency clock keeps running from the older one.

How long does foreclosure take after the first filing?

State law sets the pace after day 120. HUD gives FHA servicers a deadline to get from the first legal step to holding title and possession of the home, which comes after the sale: 6 months in Georgia, 8 in Texas, 12 in California, 19 in New Jersey, 21 in New York outside New York City, and 25 in Florida. These are HUD's limits for servicers, not a count of your remaining time, and a sale can come sooner. HUD allows more time in New York, New Jersey, and Florida, which use court foreclosure. How foreclosure works has the full state table and explains what happens at and after the sale.

How do you read the delinquency section of your statement?

Once you are more than 45 days behind, your monthly statement must include:

• Length of delinquency, in days as of the statement date. Subtract it from 121 to see roughly how many days remain before a first foreclosure filing is allowed.
• A warning about risks, such as foreclosure and the fees you may owe if you do not catch up.
• A 6-month account history showing the amount still past due from each billing cycle, which tells you whether a payment was applied to an older month.
• Any loss mitigation program you have agreed to, such as a repayment plan.
• Whether the servicer has made the first foreclosure notice or filing. If it says yes, the 120-day period is over.
• The total needed to bring the account current, the figure to compare with what you can pay.
• Housing counselor information, including how to find HUD-approved counselors.

Every statement also shows the late fee amount and the date it will be charged if your payment has not arrived. Small servicers do not have to send periodic statements, and servicers of some fixed-rate loans can send a coupon book instead. The periodic statement rule covers the rest of the statement.

What should you do before day 120?

1. Before the grace period ends, pay if you can. One payment avoids the fee and the credit mark.
2. By day 30, call the servicer and ask what options it has. The special servicing rules for delinquent borrowers covers what the servicer must tell you.
3. Well before day 120, send a complete loss mitigation application. The steps before a foreclosure filing explains the deadlines, and alternatives to foreclosure compares the options.
4. If you receive a breach letter, note its cure date. What it means to default explains that letter, acceleration, and reinstatement.