First, it depends on your definition of behind. It may not be the same as the bank’s definition (not shocking). Let’s examine:
1 – 15 Days Late
Most companies allow a 15-day grace period before tacking on any additional fees. I know that being self-employed, my mortgage company calls me on the second of the month if I didn’t pay on the first, but there’s nothing to worry about if you’re “behind” less than 15 days. No big deal. That’s why they call it a “grace” period.
15 – 30 Days Late
If you’re in that 15 to 30-day time frame, prepare for a ton of telephone calls from your mortgage service provider (probably between two and four a day). You’ll also begin receiving letters reminding you that if you forgot to pay your bill, now would be the perfect time to make that payment.
Back when my income was very unsteady, a sneaky trick my mortgage company would pull was to send out another bill insinuating that I was two months behind and that if I disagreed with them I should call ASAP. Sneaky snake oil salesmen they were.
During this fifteen to thirty day period, if you can’t pay, don’t worry about the phone calls. You’ll have to pay a small late fee of some kind, but there still won’t be any damage to your credit report.
30 – 59 Days Late
It’s important to note here: If you’re running up against that 30-day late period, it’s best to drop everything and pay your mortgage. Even if you’re habitually late 29 days; it’s better than being 30 days late from a credit reporting standpoint.
Now the letters and phone calls increase dramatically until you’re 60 days late. Your credit report will note your current late status. Your credit score will fall.
60 – 90 Days Late
Here the phone calls and letters will cease. Does the mortgage company give up? Ah…that would be nice, but alas, no. They change tactics.
Once you’re over 60 days late, they’re going to send someone out to your house, just to make sure it and you are still there. You can see these people coming a mile away.
They circle your block two or three times, usually, they don’t look like they belong in your neighborhood, then they run up to your front door, peer in a window or two and leave a note on your door saying “Sorry we missed you. Please call us at once.”
It’s at this point you should start preparing for your next steps. If you’re 60 or 90 days past due, it’s probably a lingering problem, but all hope isn’t lost.
The best thing you can do when you’re behind is to communicate with your lender. Home lenders have instituted a number of programs to help you work through your late status.
The second biggest thing to remember is that the people you talk to don’t know you and you don’t know them. They don’t care about your problems. It makes no difference to them whether you stay in your house. They’re a thousand miles away in a cubicle. Stay calm while talking to your lender.
When you’re behind more than 30 days, you need to start talking – but don’t wait until it’s too late. Call your mortgage company, explain your personal circumstances, and begin laying the groundwork to solve the problem.
Can you pay the late payment over a couple of months? How about rolling that payment to the back of the mortgage? Can they waive a fee or two? Sometimes they will, sometimes not, but you’ll never know if you don’t ask.
Next week I’ll talk about the different options you have when you’re really behind on your mortgage and what they all mean. Stay tuned!
For more on paying off your Mortgage and ways to help you do it check out these articles.
Pay a Little Extra on Your Mortgage – What a Difference it Makes
6 Tips for Paying off Your Mortgage Quickly (Without Going Broke)
Don’t Be Afraid to Refinance: 6 Options to Meet Your Financial Needs
Photo: Hanging On: Jess2284
*Securities offered through Securities America, Inc., Member FINRA/SIPC. Advisory services offered through Securities America Advisors, Inc. Securities America and its representatives do not provide tax or legal advice; therefore, it is important to coordinate with your tax or legal advisor regarding your specific situation. Please see website for full disclosures: www.crgfinancialservices.com
My name is Jacob Sensiba and I am a Financial Advisor. My areas of expertise include, but are not limited to, retirement planning, budgets, and wealth management. Please feel free to contact me at: jacob@crgfinancialservices.com
Wow the things they do to get their money, hopefully I won’t have to face this when I get my house next year
I hope not either, Aaron!
Glad I’ve never been in that boat. At least they are polite enough to not even knock. Everyone cuts corners somehow.
thankfully.. i haven’t had to deal with this.. but we had a neighbor who was foreclosed upon a few years ago.. we knew that something was up from the way that they stopped taking care of their property, and then one night– they were gone. so sad.
One night? Like packed up and left overnight?
There was a post on the Internet the other day about the parents of one of the US Olympic Swimming Competitors. Apparently they stopped making their mortgage payments in the spring of 2011 but they are still living in their home. They don’t appear to be too worried about losing their house either. I was very surprised to see that they could get away with not paying for such a long time.
I have a whole diatribe on this I could go into, but won’t. I’ll just say: I’m surprised, too!
here’s a link to the article. they are in Florida too.
http://www.inquisitr.com/292825/ryan-lochtes-parents-facing-foreclosure-on-florida-home/
Ryan Lochte’s parents! Can’t believe I missed that story. Wow, that’s sad.
It’s never fun being behind on bills but it’s great to know how the process works. From all accounts it sounds like the mortgage collection practice is very similar to other debt collectors (personal loans, credit cards, etc.).
Only different in the way that they act after 60 days. I never had an American Express hit man come to my house back during that year I made almost no money.
What’s the mortgage payment on a $47M home? Sheesh!
I think it’s somewhere around a bazillion a month, Kathleen, if my math is right.
Great post. Whether you own a house or not, it’s important to know what happens when you fall behind. Ideally people would know this BEFORE getting a mortgage, but it’s better late than never.
Never been in this boat myself but good to know in case I ever have someone ask me about it, especially being a PF blogger and all.
Interesting read, I am a renter and had no clue about the process. I know what happens if you are late on your credit card payment though.
Good advice! Most people hide when they fall into difficulties, but it is the worst thing you can do. If you communicate with the lender, you have a chance to solve the problem.
Back before the recession, eviction and foreclosure took only, on average, 4 to 5 months; 15 months now. So you really don’t have too much time beyond 90 days before you are packing your bags.
Creditors may not care about your situation, but they are paranoid about getting paid. Nothing freaks them out more than not communicating with them. Often, simply talking with them will save you some hassle.
I have made it a point to not find out what happens when you’re late on a mortgage payment. Great post though 🙂
That’s what I told OG when he was researching and writing the post!
Ever known of someone who just packed up a left and just didn’t care about the mortgage anymore?
I never plan on finding out what would happen if I was late, but that’s just me.
I really liked your breakdown! 🙂
Don’t ever answer the phone, I guess. 🙂 I have a friend who is consistently one month behind. She pay’s December’s mortgage payment in late January, etc. So far, they’ve sent threatening letters, but as long as they keep accepting the money, she thinks that she’s fine. They haven’t foreclosed yet but she’s been doing this for the past 2 years.
Thank you for this information. This will help homeowners who are having trouble with their mortgage. Talking to the lender ahead of time is definitely a good thing. Saying that you’re having difficulty with balancing your finances because you lose your job or something will definitely make your lender understand that you’ll be late on payments.
If you’re 60-90 days late, there are some serious financial implications. First to bring your account up to date, you will need to pay up 2-3 months worth of late payments. From my experience, people generally don’t have that kind of money laying around. After some time, late payments will start to affect your credit score and will affect you ability to get a mortgage in the future. ouch!
Great points, Pat. Thanks for stopping by. That’s the reason it’s SO important to communicate. If you can’t pay all the late fees, you’ll need to begin discussing your options.
Dear TheOtherGuy,
I liked what you said about Thankfully, we’re starting to see some hints of improvement in the residential mortgage sector.
Continue this kind of articles because they are very good and useful, congratulations.
It’s scary to be behind on your mortgage. We’ve recommended alot of our clients to a reputable bankruptcy firm to see if they can sue the lender if they are more than 6 months behind and have exhausted all the options that you’ve stated above.
Moral of the story – try your darndest not to fall behind on mortgage payments! As Whenrica McAfee suggests above – beyond a certain point bankruptcy is the only way forward. Very sad 🙁