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Does foreclosure start after one missed payment?

On Behalf of | Feb 28, 2024 | BANKRUPTCY LAW - Foreclosure

Foreclosure happens when someone fails to pay their mortgage. As long as the lender gets the monthly payments, they don’t interfere with homeownership. But if those payments stop, the lender may try to reclaim the home and sell it to a third party, getting back their investment.

But does this mean that you are going to lose your house if you miss one mortgage payment? What if you just forget to send it in? What if you have one bad month where you can’t make ends meet, but you’re fairly sure that you can pay your mortgage moving forward? Is foreclosure going to be a risk anyway?

It typically takes multiple missed payments

The good news is that most lenders will not foreclose after one missed payment. Technically, they may have the legal right to do so. Missing the payment means that you are in violation of the contract you signed and they have the right to reclaim the home.

But that doesn’t mean that lenders would prefer to do this. It usually costs them money to foreclose on a home. It’s a lengthy process, and they tend to make less money reselling the house than they would’ve made if the original owner had just made their mortgage payments.

As such, lenders aren’t in a rush to foreclose. You may have options you can use to get current on your mortgage again. The lender is only going to move toward foreclosure when it becomes evident that you are not going to be able to pay the mortgage consistently and it appears that they will not get their money back otherwise.

This can be a complex situation. Be sure you know about all of your legal rights.