Foreclosure occurs when a homeowner stops making payments and the bank ‘forecloses’ on the mortgage, or trust deed in some states, and seizes the home.
The most common reasons homeowners stop making payments are:
- Job loss
- Medical problems (which is also the number one reason people file for bankruptcy)
- Debt problems
- Job transfer
Homeowners who are struggling financially often wonder how many mortgage payments can you miss before the bank starts the foreclosure process? The answer is…it depends.
First, your bank’s policies have a significant impact on how many payments you can miss before they initiate foreclosure proceedings. If your mortgage lender primarily deals with low-risk borrowers, then they may be more lenient and allow you to miss three or four payments before taking action. However, if your bank primarily lends to homeowners considered risky, then their policies may be more stringent and they may choose to begin the foreclosure process as soon as someone falls one or two payments behind.
Second, current market conditions may also play a role in how many payments someone can miss before the bank starts filing for foreclosure. If the rate at which homeowners are defaulting on their mortgage begins to rise sharply in your area, banks will be much more hesitant to allow owners in your city or neighborhood to fall behind several payments.
At the time of this writing there were approximately 586,000 properties in the U.S. that were in some stage of the foreclosure cycle. Currently, about 1 out of every 1,903 homeowners will receive a foreclosure filing. So, if you’re one of the many Americans facing foreclosure, you’re not alone.
If you’re in danger of being foreclosed on, you need to take action as soon as possible. If you’d like to learn more about what your options are, here’s a great article.
This article is for information purposes only and nothing stated or implied on this page should be taken as legal, tax, or professional advice.