Foreclosure

What Is Foreclosure?

Foreclosure is the legal process a lender uses to take back a home when the borrower stops making payments. Depending on your state, it may go through the courts (judicial foreclosure) or follow a process spelled out in your loan documents (non-judicial foreclosure). Foreclosure can seriously damage your credit and make it harder to buy another home for several years.

Foreclosure is usually the last thing a lender wants. It's costly and slow for them too. That's why servicers are required to review you for other options, and why reaching out early gives you the best chance of keeping your home or leaving on your own terms.

What Happens When a Payment Is Missed?

• After the grace period (often 15 days), a late fee is usually charged.
• At 30 days late, the late payment may be reported to the credit bureaus.
• By about 36 days, your servicer must try to contact you about options.
• By 45 days, you should receive written information about ways to avoid foreclosure.
• Around 90 days, a formal default notice is common.
• Federal rules generally bar a servicer from starting foreclosure until you're more than 120 days behind.

Timelines are general and as of 2026, subject to change. Your state's rules may add more steps.

How to Avoid Foreclosure

• Don't ignore the problem. Open your mail and answer calls from your servicer.
• Call your servicer right away. Explain your situation and ask about hardship options.
• Talk with a HUD-approved housing counselor. Their help is free or low cost. Call (800) 569-4287.
• Review your budget and prioritize your housing payment.
• Beware of scams. Never pay upfront fees to someone promising to save your home.

Long-Term Hardship Solutions

• Loan modification: Permanently changes your loan terms, like the rate or term, to make payments affordable.
• Refinancing: If you have equity and qualify, a new loan may lower your payment.
• Short sale: Selling the home for less than you owe, with lender approval.
• Deed-in-lieu of foreclosure: Voluntarily giving the home back to the lender. Usually less damaging than foreclosure.
• Selling the home: If you have equity, selling may protect it.

Your servicer will usually ask for a hardship letter, recent pay stubs or proof of income, bank statements and a monthly budget. Sending a complete package quickly helps speed up the review. Keep copies of everything and write down the name of each person you speak with.

Temporary Hardship Solutions

• Forbearance: Payments are reduced or paused for a short time while you recover.
• Repayment plan: Missed payments are spread over several months on top of your normal payment.
• Payment deferral: Missed payments are moved to the end of the loan, due when you sell or refinance.

If you're facing a hardship, please reach out. I'm happy to talk through your situation and point you toward the right help.

Temporary options work best when your hardship has a clear end, like recovering from an injury, waiting on a new job to start or dealing with a short-term drop in income. When the forbearance or plan ends, your servicer will review you again to decide on a long-term solution if you need one. Ask in writing what will happen when the temporary period ends so there are no surprises.