Behind on Your Mortgage Payments? Start With the Facts.
Behind on your mortgage does not necessarily mean underwater.
What should I do after missing a mortgage payment?
Three things, in this order. Confirm the payment actually did not post, because processing errors and autopay failures are more common than people expect. Contact your servicer and ask specifically what loss-mitigation options exist on your loan. And write down the date of the missed payment, because every deadline that follows is measured from the delinquency, not from when you noticed. One payment is not a foreclosure. It is the moment when the widest set of options is still available, which makes it the cheapest time to act.
When should I contact my mortgage servicer?
Now, and in writing where you can. Servicers have loss-mitigation departments precisely because foreclosure is expensive for them too. Ask what applications exist for your loan, what documents each requires, and what the deadlines are. Under California Civil Code §2923.7 you may request a single point of contact, which spares you re-explaining your situation to a different person every call. Keep a log: date, who you spoke with, what was said, and any reference number.
Can I sell while I am behind on payments?
Generally yes. Being delinquent does not remove your right to sell, and a sale that pays the loan in full resolves the default. What shrinks is time — a sale needs escrow to close before a trustee sale occurs, and that is a real constraint once a sale date is set.
What if I still have equity?
Then you likely have the widest range of choices of anyone reading this page, and the most to lose by waiting. Equity gives you the option of a traditional sale that pays every debt and returns the remainder to you. It also erodes during a default, through arrears, fees, taxes and lien growth.
What if I owe more than the home is worth?
Then a traditional sale will not cover the debt, and a lender-approved short sale may be the relevant path. It requires the lender's agreement to accept less than the full balance, along with hardship and financial documentation. Under California Code of Civil Procedure §580e, no deficiency is owed after a lender-approved short sale on a one-to-four unit dwelling, subject to exceptions including entity borrowers, fraud, waste and other collateral.
What happens when a Notice of Default is recorded?
A Notice of Default is the formal start of California's nonjudicial foreclosure process. Before it can be recorded, the servicer must contact you or satisfy due-diligence requirements, and 30 days must elapse (Civil Code §2923.5) — for first-lien, owner-occupied one-to-four unit principal residences (§2924.15). Once recorded, at least three months must pass before a Notice of Trustee Sale may be recorded (§2924(a)(2)). Your right to reinstate runs from the Notice of Default until five business days before the sale date (§2924c(e)).
How do foreclosure expenses affect my equity?
They come off the top. Arrears, late charges, advanced property taxes, forced-placed insurance, trustee fees and attorney fees are added to what must be paid before any money reaches you, and they grow the longer a default runs. Junior liens, unpaid HOA dues and special assessments sit in the same queue. Two homeowners with identical property values can end up with very different net proceeds purely because one acted six months earlier.
When should I contact a housing counselor or an attorney?
Contact a HUD-approved housing counselor as soon as a retention option is on the table. Foreclosure counseling is free, always — use the locator at hud.gov or call 800-569-4287. A counselor works for you and can help you assemble a complete application, which matters, since an incomplete one may not carry the protections a complete one does.
Contact an attorney where there is a dispute about the debt, a question about servicer conduct, a bankruptcy question, a probate or title complication, or a deficiency question. We are a real estate resource — we do not give legal, tax or credit advice, and we will tell you when a question belongs to someone else.
Information provided is for general educational purposes and is not legal, tax, credit or financial advice. Mortgage-retention and short-sale options require approval from the applicable lender, investor or loan servicer. Available options depend on the homeowner, loan, liens, property value and foreclosure timeline.
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KW Home Solutions, part of KW Default Solutions and powered by Keller Williams Realty. Corporate Office: Laguna Niguel, CA.