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Were you aware that as soon as you’ve missed three (3) consecutive mortgage payments in a row, that most lenders will NOT let you pay less than the full amount (all three payments at once) at that point?

If you’re struggling right now to just keep up with your mortgage payments until you can work out something with your lender, or the government’s bailout program steps in to help you, then did you know that you can continue to run 30 or 60 days behind indefinitely? Most lenders will continue to let you make one payment every month, as long as you are NO MORE than 60 days behind on your mortgage. This isn’t going to help your credit score any, but it does buy you some time.

What happens if I miss that 3rd payment?

Once you miss that 3rd mortgage payment and are a full 90 days delinquent, your lender will no longer accept less than 3 full months of payments to bring you current. They are also required to file an NOD (Notice of Default) against your property, and this marks the beginning of the foreclosure process. From here, the phrase “foreclosure process started” is going to appear on your credit report (and will remain there for 7 years even if you bring the loan current) and your loan is going to start to incur additional, pretty hefty charges because of the process itself.

Unless your lender can work out an arrangement with you before your home “goes to sale”, and you lose it forever, which takes a minimum of 90 days, then buying time by making at least one mortgage payment before you are 3 months down is the best way to go, if you can possibly do it.

What if I’m already 90 days late?

If you’ve already missed 3 months of mortgage payments and your lender has already filed an NOD against your property, the first thing to do is contact that lender and see if they’ll be willing to renegotiate your loan terms, so you do not lose your home. Mortgage lenders are NOT in the business of owning real estate, and right now, the last thing they want is to own another house. They own too many already! If you don’t get satisfaction at the first level that you speak to, ask for their supervisor and keep moving up the “food chain” so to speak, until you actually talk with someone who can answer your questions with the authority to do so. In business, I’ve found that “Those who scream the loudest, get the best service.”

Don’t spend the money!

A lot of folks will have some of their mortgage payment, but possibly not all of it. One of the biggest mistakes you can make if you are in this situation, is to spend that money on something else. Just because the lender will not accept less than 3 payments to bring your account current, does not mean that you will not need to come in with “some money” if you can negotiate a loan modification with your lender. A lender is going to be more willing to work with you, if you’re willing to do your part and bring some cash to the table during the negotiation process. Even if this turns out not to be the case, you’re going to need somewhere else to live and now that your credit is shot, you’re going to look a lot better to a prospective landlord if you have enough cash to come in with first and last months’ rent, along with a security deposit, so be smart about what you do with that extra money.

For more information visit: Taylor McKenzie, Credit Trauma Specialist: http://www.MortgageCreditTrauma.com

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