Can a NJ Lender Foreclose for Late Payments Only?

5453256945_b20cd75db1_z

Like millions of Americans who own their own homes, your largest monthly bill is most certainly your mortgage payment. This is especially true if you’ve wrapped your property taxes in with your mortgage loan. Paying your mortgage each month can feel physically painful at times, especially if you have to write out all of those numbers on a paper check. OUCH.

Nonetheless, you obviously knew what you signed up for when you applied for your current mortgage, so its appearance each month doesn’t necessarily come as a surprise. Why, then, are so many Americans habitually late in paying for this particular loan?

The answer to that is simple. A large percentage of homeowners in this country are living paycheck to paycheck – earning just enough money every month to fulfill their financial obligations. This leads to tense moments when there simply aren’t sufficient funds in the bank to make the huge mortgage payment without fear of bouncing a check.

Nobody wants to bounce a check – we all know that. The hassle combined with added fees from your bank AND your lender mean that bouncing a check is an extremely costly mistake. Instead of potentially writing a check that can’t be cashed, many homeowners simply wait until their bank account has enough money to fulfill the mortgage payment. Sometimes this means the mortgage payment gets sent in a few days (or weeks) late.

The question here, is: Can a lender foreclose on a homeowner if they are chronically late with their mortgage payment? To clarify, we’re talking about a borrower who hasn’t actually missed any payments and technically isn’t “behind” on their mortgage – only slightly late with nearly every payment.

The short answer is that almost no lender will move toward foreclosure if the borrower isn’t actually behind on payments. That’s not to say it has never happened, but if it has, it’s exceedingly rare. In most cases, lenders don’t send out ‘Intent to Foreclose’ notices until a borrower has missed 3 full mortgage payments. Some lenders will threaten foreclosure after one missed payment, but as long as you can bring the mortgage current, they back down.

What can happen to you if you consistently pay your mortgage (or any other monthly bills) late is that your credit score can drop. Even though you may avoid foreclosure, late payments are often reported to credit reporting agencies, and each late payment will ding your score a few points. If you’re late every month for a year, your score may have dropped over 100 points.

If you’re currently struggling to pay your mortgage in a timely manner, there are some things you can do. First, check your credit score to see how much damage you’ve done. That gives you a good starting point. Next, get in touch with your lender and tell them why you’re having trouble paying on time. You may benefit from changing the time of month that your payments are due, paying online, or paying via telephone when your bank account is primed and ready.

If none of the above options is enough to alleviate your tardiness, you may benefit from applying for a NJ loan modification. You can apply for one on your own, but many times a real estate attorney can negotiate with your lender much more effectively, working to extend the life of the loan, reduce the principal amount due, erase late fees, and maybe even lower the interest rate on the loan. One or a combination of these modifications can make paying your mortgage on time much more manageable.

 

Image credit: John Lloyd

Advertisements

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: