Unexpected challenges in life, such as prolonged illness or job loss, can unfortunately result in delayed mortgage payments. When payments become three or more months late, foreclosure can become a very real possibility, depending on the terms of the mortgage. A mortgage payment is considered late if the lender receives payments after the due date set out in the mortgage. Consequences can result after a payment is more than 15 days late and may result in a late payment fee. In the event two or more mortgage payments are owed, all payments and late charges must be submitted before another payment is accepted and the loan is current. If three or more mortgage payments are due, foreclosure proceedings may be initiated.

If an owner feels the servicing of the home debt has become an unmanageable burden, he or she may opt for a deed in lieu of foreclosure and hand the home over to the bank. This action can however harm the owner's chances of renting a home or apartment elsewhere. In the event the owner has equity in the house, it may be possible to acquire a second mortgage or consolidate bills through an equity line of credit. Such measures can improve the owner's finances in an emergency, but borrowers should be careful as they are incurring greater debt. Organizations dedicated to helping people in short-term financial trouble, such as churches and civic groups, can be of assistance.

Although the possibility of foreclosure seems like the end of the road, it is important to remember that lenders don't like to foreclose on mortgages. Foreclosure proceedings are costly, so lenders often try to avoid foreclosure as a way of limiting losses. If a homeowner is behind on payments, lenders likely will work to bring the loan current. The owner, however, must stay in communication with the lender and be honest about his or her current financial situation. The willingness to help on the part of the lender will depend heavily on past payment records. Consistent and timely payments with no history of serious defaults are likely to make the lender more receptive than a record of unexplained chronic late payments. Any homeowner expecting to fall behind in payments would benefit from meeting with their lender to discuss possible payment arrangements. The lender will inquire about monthly income and expenses as well as assets and liabilities.

A loan workout plan may be arranged between the borrower and lender in order to prevent foreclosure. It will often include deadlines that must be met in order to avoid foreclosure. The plan will depend on the seriousness of the late payments, prospects for obtaining funds to settle the debts, and whether the financial difficulties are short term or long term. If the cause of the default is likely to end within 60 days, the lender may grant a temporary indulgence. This agreement may occur in the event that a house has been sold but the sale is not final.

Another option for those who have suffered a temporary loss of income but who demonstrate their income has returned to its previous level, may be able to devise a repayment plan. This plan involves a normal mortgage payment along with an additional payment that will settle the balance owed in no more than 12 to 24 months. Although repayment plans are the most common type of agreement, the additional amount may be a lump sum due on a specific date.

Finally, in some cases, it may be impossible for the owner to make a payment. In such a case a forbearance plan will allow for the suspension or reduction of payments. Although these plans represent the final efforts by both parties, they are not necessarily a substitute for sound financial planning.

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