What Is a Serious Delinquency?

Serious delinquency is when a mortgage l꧒oan is 90 days or more past due, and the bank considers the mortgage in danger of default due to nonpayment.

Once a mortgage is in default, a lender may initiate 澳洲幸运5开奖号码历史查询:foreclosure proceedings to recoup the loan losses 🐼by reselling the property. However, borrowers experienc⛎ing financial hardship who are in serious delinquency have options to avoid foreclosure.

Understanding Serious Delinquency

Mortgage 澳洲幸运5开奖号码历史查询:delinquency can occur when a borrower falls behind in their monthly payments. After 30 days of nonpayment, the loan would be considered delinquent, but if no paymꦦents have been made for 90 days or more, the loan would be in serious delinquency.

Serious delinquency can also reference any form of debt payment, such as a late credit card or loan payment. The definition of what constitutes a serious delinquency can vary by lender and creditor, although 90 days past due is generally considered serious delinquency. Whether 30, 60, or 90 days past due, the credit will likely be considered in default, meaning payments have not been made for some time.

Mortgage Delinquency Solutions

In some cases, those who are in serious 澳洲幸运5开奖号码历史查询:delinquency can work with their 澳洲幸运5开奖号码历史查询:mortgage lender to work out a payment plan. Borrowers who are delinquent in making their mortgage payments should contact their lender since there are seve𝔉ral options to avoid losing your home.

Mortgage Forbearance

A 澳洲幸运5开奖号码历史查询:mortgage forbearance is an agreement between the mortgage lender and the 𒊎borrower to bring the payments current. For borrowers in financial distress due to an illness or loss of income, forbearance can provide temporary relief.

The lender might suspend payments or allow for lower payments for a period o♛f time. At the end of the forbearance period, the borrower must make the payments as agreed. The forbearance terms can vary by lender, but some lenders might grant an extension to the forbearance period.

Loan Modification

A loan modification is a 澳洲幸运5开奖号码历史查询:renegotiation of the loan terms and typically o🅰ccurs when the borrower is in financial distress. The loan term 🧸gets modified by the lender to help the borrower get back on track to repay the loan. Loan modification features include the following:

• Loan term gets lengthened to allow for time to repay
• Lower interest rate
• Lower monthly payment
• Lower loan balance called the principal
• Different type of loan

For example, borrowers experiencing financial hardship with a mortgage loan owned by the government-sponsored 澳洲幸运5开奖号码历史查询:Fannie Mae can opt for a Flex Modification. The program may allow for a 20% principal and interest reduction. Also, the loan term can be extended to 480 months or 40 years, which helps lower the monthly payment and provides more time to repay.

Short Refinance

A 澳洲幸运5开奖号码历史查询:short refinance is used for borrowers in default or serious delinquency whereby the lender agrees to extend a new loan, replacing the old loan with a new, lower loan balance. The 澳洲幸运5开奖号码历史查询:mortgage lender would take a loss on the difference, and the borrower would receive a l𒁃ower monthly payment and new loan term.

A short sale is usually the last step before 澳洲幸运5开奖号码历史查询:foreclosure, which is when the lender repossesses the home and rese♋lls it to recoup the loss on the loan.

Foreclosure

If the borrower has defaulted, the mortgage lender may opt to foreclose on the property. 澳洲幸运5开奖号码历史查询:Foreclosure is time-consuming and expensive for a lender, and in ce𒊎rtain situations, the lender might prefer other optio🦹ns to save time and money.

A 澳洲幸运5开奖号码历史查询:deed in lieu of foreclosure is a type of foreclosure in which the borrower transfers the title of the property to the lender, avoiding the foreclosure process. The borrower would lose their home and need to relocate but would be free of the debt obligation.

Example of Serious Delinquency

Let's say the Smith Family purchases a home valued at $400,000. After a down payment of $80,000, the Smith Family takes out a home mortgage with Fannie Mae for the remaining $320,000.

30 Days Past Due

After several months of on-time payments, both Mr. and Mrs. Smith lose their jobs and cannot make their mortgage payments. They miss one month of their mortgage payment, whicꦜh warrants a call and an official letter from their lender. The lender would report that they are delinquent on♐ their loan to the credit bureaus.

60 Days Past Due

After missing a second month, another call and letter are sent to the Smiths. The lette𝔍r warns them that they are nearing serious delinquency status, and foreclosure could occur if they continue to ignore payments and any resulting late payment fees. The lender will also call them to explore financial options to avoid foreclosure.

90 Days Past Due

After reaching 90 days past due on their mortgage, the Smith Family's loan officially enters serious delinquency. They are notified via phone, email and official letter of their serious delinquency status.

120 Days Past Due

If the loan has been delinquent for 120 days or more, the mortgage lender will begin legal action and the foreclosure process.

The Bottom Line

Serious delinquency can occur when a borrower is past due by 90 days or more on a mortgage loan or other credit product. A serious delinquency can impact your credit score and lead to difficulty obtaining new credit. If you are in serious delinquency with your mortgage, contact your lender since there are programs to help you avoid foreclosure and losing your home.