What happens when you miss a mortgage payment?

Quick insights

• If you’ve missed a mortgage payment, you may be able to pay it within a 15-day grace period to avoid negative consequences.
• Communicating proactively with your lender can help you avoid misunderstandings, establish goodwill and discuss your options.
• It’s typical for lenders to begin foreclosure proceedings after 4 missed payments (or 120 days).

Whether your paycheck was delayed, an issue occurred with autopay or the date slipped your mind—missed bill payments happen. But what happens if you miss a mortgage payment? For many people, mortgage payments are their most significant recurring expense in both size and priority.

In this article, we’ll provide general information about what happens if you miss a payment, how many mortgage payments you can miss and how to respond before things escalate.

Immediate consequences of a missed mortgage payment

So, you’ve missed a payment. If it’s only been a day or two, you may still be able to make a payment without any adverse effects. Mortgage lenders may provide a grace period of 15 business days when you make a payment without negative consequences. If you need to make a late payment after the grace period, you can expect:

• Lender notifications: In most cases, borrowers will receive direct communication from their lender after a payment has been missed. This could arrive by phone, email, paper mail or all of the above.
• Late fees: Your mortgage lender may charge an additional late fee on top of your missed payment, which could be as much as 6% of the monthly payment amount, depending on the terms of your loan agreement. This may vary depending on the mortgage servicer.
• Credit score effects: The impact of a missed mortgage payment on your credit score could be significant.

How to handle a missed mortgage payment

If you’ve missed a mortgage payment (or expect to), be proactive. Reaching out to your lender directly can help avoid misunderstandings and demonstrate your intention to resolve the matter promptly. Through communication, you may be able to request a fee waiver for the missed payment, especially if it’s your first time. For ongoing problems related to financial hardship, the lender may be willing to temporarily pause or reduce payments.

How many mortgage payments can you miss before foreclosure?

Continuing to miss payments can result in foreclosure. During a foreclosure, the mortgage lender can take possession of the property as a means of recovering the unpaid balance of the loan. Foreclosure processes are different in every state but typically can start when a customer is 120 days delinquent or has 4 missed payments.

The foreclosure timeline

Foreclosure proceedings vary from state to state. In general, the milestones you can expect to see after missed mortgage payments will play out as follows:

Step 1: First and second missed payments

For the first two missed payments on a mortgage, your lender will attempt to reach you and retrieve payment (plus a late fee, if applicable) to bring the loan current.

Step 2: Notice of default

After a third missed payment, the lender may take steps to declare the loan “in default.” Depending on the state, this part of the process may include a court hearing. A Notice of Default (NOD) will be filed with the county recorder's office and sent to the borrower. Depending on local laws, the NOD may also be affixed to the property’s front door. The NOD brings the lender one step closer to enforcing their lien, or their right to possess the property and recover the unpaid loan amount.

Step 3: Pre-foreclosure begins

After the NOD has been filed, the pre-foreclosure phase that follows is the last opportunity the homeowner has to save their home from foreclosure. The homeowner may still be able to make back payments to get out of pre-foreclosure, often with the addition of other fees and court costs. The specifics of this phase and personal options can vary depending on the location and circumstances.

Step 4: Notice of sale

If the homeowner cannot retrieve their property from pre-foreclosure, the lender may move to sell it at auction to recover the unpaid loan amount. The homeowner will be notified of the sale date and time. In some situations, the homeowner will have a last chance to buy the property themselves through a “right of redemption” action.

Step 5: Eviction

After the home is sold, remaining occupants will be mandated to leave the premises. Refusing an eviction can have serious consequences, including facing pressure from the local sheriff or marshal. In tense circumstances, a homebuyer may offer reluctant occupants a “cash for keys” deal where they are paid a modest amount to leave the property.

In conclusion

Foreclosure is the worst-case scenario for missed mortgage payments. There are many ways to recover from a missed mortgage payment before things escalate. If you’ve recently missed a payment—or may soon miss one—consider reaching out to your lender proactively to discuss your options and obtaining legal guidance for specific state laws.