FHA Loan Delinquency Timeline -- How to Avoid Foreclosure
In every case, the actions include contacting the lender and making some form of payment. The longer a borrower goes without making these arrangements, the worse the situation becomes.
An FHA mortgage holder who has missed the first payment should not delay in contacting an FHA housing counselor to prevent the situation from getting any worse. FHA housing counselors are listed by state at the FHA official site.
FHA requirements include having the lender contact you by letter or by telephone. Wouldn't you like to be able to give the lender some good news that you're being proactive about the situation?
If the borrower has missed a second FHA loan payment, chances are the lender has gotten more active about getting in touch. Again, the FHA encourages borrowers to take proactive steps to prevent foreclosure including an appointment with an FHA housing counselor. A borrower is dangerously close to having the FHA mortgage go into delinquency at this stage. By the time a third payment is missed, the lender has drafted something called a Demand Letter saying the borrower has one month--thirty days--to bring the mortgage up to date.
It's important to understand that "up to date" means paying the specific amount stated in the Demand Letter, though an FHA borrower may be able to negotiate a different payment on a case-by-case basis.
In some cases a homeowner in trouble can avoid getting a Demand Letter if they have made a payment somewhere in between missing the first and third payments, but the best course of action is to get in touch with the lender to make arrangements rather than hoping for the best. There is time to work things out with the lender between the first and third missed payment, but the longer the mortgage goes unpaid, the worse things are for the borrower.
By the time an FHA loan holder has missed their fourth payment, time is running out to negotiate with the lender, even with the counseling help of the FHA. If payment or arrangements have not been made by the time the fourth payment is missed (or the deadline in the Demand Letter has gone by) the homeowner is referred to the lender's attorneys and an expensive process begins. The borrower must pay all attorney fees related to the delinquency.
At some point, unless other arrangements and/or payments have been made, the lender's attorneys will schedule the house to go up for sale and a foreclosure date will be issued. The foreclosure date is not necessarily the day the delinquent owner must vacate the home--that usually depends on the date of sale (or according to state law).
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