When Late Payments Are a Real Problem
A payment thirty days late can signal a growing problem for the borrower. The first issue is how to make up the past-due payment and late fee plus make the next payment.
At the beginning of the next month, when the next payment is due, the lender rightfully becomes concerned over the past month's payment. It's a matter now that two payments are due: the current month's and the past month's payment. Depending on the lender's policies, certified letters, phone calls, or correspondence from a legal department or attorney may be part of the communications forwarded to the borrower. At this point the lender really does want the borrower to catch up on the late payment and make the current payment. Some lenders will be more lenient than others. Some will threaten immediate legal action while others will encourage communication, all for the purpose of bringing the loan current.
Too many borrowers facing foreclosure go into hiding. They refuse to speak or communicate with the lender. It's probably the biggest mistake they can make. The best way out of the tough situation is to find a solution with the lender. Ignoring the warnings and hoping the situation will get better never works, even though many people facing foreclosure do just that.
When the payments are missed, foreclosure may occur at any time. Each state has its own laws and procedures that the lender must follow when commencing foreclosure. Foreclosure is a legal process that a lender uses to repossess or take over the real estate. The property is, after all, the collateral of the loan.
Foreclosure is not an instant process. It takes time to foreclose on a loan because it is a legal process. Depending on the jurisdiction, it can take four to eight months for a routine foreclosure to proceed through the court system. Foreclosures that do not proceed through court — the nonjudicial foreclosures — can be completed in half the time.
Lenders will usually do everything possible to assist borrowers to become current with their payment. It is far better, in the eyes of the lender, to have a loan return to current status than it is to foreclose.
