Overview

When someone takes out a single-family mortgage to purchase a home, refinances an existing loan, or borrows against home equity, he or she is entering into a contract. That contract stipulates that the borrower will make payments under very precise terms. If the borrower does not pay as scheduled, he or she is in violation of the mortgage contract.

Typically, a lender begins efforts to collect missed payments shortly after the due date in order to bring the homeowner current on the loan. After 90 days, or three missed payments, lenders generally step up efforts to recoup past-due payments, and they lay the groundwork to foreclose on the home. Depending on the state and the borrower’s circumstances, the home may then be sold at a foreclosure auction.

(Source: StableCommunities.org)