A delinquent mortgage is a mortgage that is not being paid on time. Once a payment is 30 days late, the lender has a right to report the mortgage as delinquent to credit bureaus and the borrower will experience a decline in his or her credit score. There are several ways a borrower can address a delinquent mortgage, which is a process known as “curing.” Curing a delinquent mortgage will resolve the delinquency and may allow the borrower to keep the property.
The option preferred by lenders is, of course, that the borrower get current with payments. If a borrower is only a month behind, sending a double payment can cure the mortgage and get the borrower back on track with the payment schedule. Borrowers who are further behind may be able to arrange a delinquent mortgage payment plan that distributes payments over several months to allow the borrower to get current. Both of these options allow borrowers to keep their homes.
Lenders can also foreclose on a delinquent mortgage, taking possession of the property and selling it to recover the amount owed on the loan. Some borrowers consider options such as a deed in lieu of foreclosure, in which the property is surrendered before the lender forecloses. This is sometimes known as jingle mail, in a reference to the fact that homeowners send their keys to the lender to surrender the property and walk away from the loan. These options will reflect poorly on a borrower's credit score, but are not as damaging as foreclosures.
Curing a delinquent mortgage may also be accomplished by refinancing or renegotiating the loan to make the payments more affordable. Borrowers who declare bankruptcy can also wipe out the delinquency and establish a new payment plan. As long as they keep to the plan, they will be allowed to retain the property. These options for addressing a delinquent mortgage usually require the assistance of an attorney who specializes in foreclosures and related matters. The attorney can help the borrower negotiate a repayment agreement with the lender.
Delinquent mortgage rates tend to rise during periods of economic recession, because the fall in the value of the economy corresponds with drops in real estate values and job losses, which make it hard for people to pay their mortgages. Lenders want to avoid situations where they end up with large portfolios of foreclosed real estate and are usually willing to work with borrowers in delinquency to reach a solution.