Home | Mortgage Delinquency | Financial Situation | Mortgage | Your Options | Beware of Scams | Rebuilding After Foreclosure | Homeowner Tools | Paperwork

Understanding Mortgage Delinquency

Are You “Behind the Eight Ball?”

Today’s economic environment is very stressful. Many Arizonans are dealing with multiple personal challenges, including:

• Loss of employment
  
• Changes in mortgage payment
  
• Unpaid bills
  
• Caring for an elderly parent
  

• Reduction in income
  
• Divorce
  
• Sudden disability
  
• Other life-changing events
  

These events can affect a borrower’s ability to make their mortgage payment on time and as agreed. When this happens, foreclosure may result.

If you are facing mortgage challenges and are at risk of default, it is important to:

• Understand the Delinquency Cycle of a mortgage and when foreclosure can occur;
  
• Contact your servicer as soon as possible to discuss your situation and
  
• Contact Arizona Foreclosure Prevention Hotline 1-877-448-1211
  
• Seek the advice of a HUD Approved Non-profit Housing Counseling Agency Counselor (see appendix for contact information.)
  

The sooner you begin working with your servicer and/or a certified housing counselor at a HUD-Approved Agency, the more likely the servicer will be able to find solutions to help you stay in your home.

Delinquency Cycle of a Mortgage Loan

This timeline is for a typical scenario for a bank loan.

Arizona law does not mandate the lender wait 90 days to file a Notice of Trustee’s Sale. If a private investor wishes to foreclose, he can do so on the 1st day of the delinquency.

What happens if I do not make my payment on the due date?

• The loan servicer expects to receive your payment by the due date. If the servicer has not received your payment by that date, it is delinquent. Most loans have a Grace Period, which is the length of time between the due date and the date when late fees begin. The promissory note contains the due date.
  

What happens after that?

• The Collections Department may start contacting you between the 16th and the 30th of the month if the payment is still due.
  

What is the Collections Department?

• The Collections department is a division of loan servicer that is responsible for obtaining and applying payments due on mortgage loan.
  
• The Collections Department will contact you to collect past due payments
  

CALL YOUR MORTGAGE COMPANY/SERVICER IF YOU KNOW YOU’LL BE LATE AND ALWAYS RETURN THEIR CALLS!!

What if I am More than 30 Days Late?

Although you are late from 1st day after the due date, the COLLECTIONS, sometimes referred to as the LOAN SERVICING Department, of your mortgage company will start calling you between the 16th and the 30th of the month.

What happens after I am 60 days late?

On the 61st day, the loan payment is 2 months past due, and if the Collections department has not been able to collect or make acceptable payment arrangements with you, your account will be turned over to the LOSS MITIGATION DEPARTMENT also known as HOME PRESERVATION or WORKOUT DEPARTMENT.

Note: Servicers / Lenders may send someone out to physically inspect the property, to verify that the borrower has not abandoned the property (sometimes between 45-60 days). This is a normal process do not be alarmed.

What happens after I am 90 days late?

On the 91st day (in AZ), a third-party TRUSTEE takes over your delinquent account. The Trustee will send a “Notice of Trustee Sale” stating that the property will be sold 90 days from the date the Notice was filed and recorded. There will be a notice published in the newspaper once a week for four weeks.

What is the process?

• The Servicer/Lender will not send any more letters. It is now totally up to you to contact them directly as soon as possible, or through a HUD Approved Non-profit Housing Counseling Agency.
• Unless you act quickly, your house will be sold at auction on the date specified.

Note: The total number of days of delinquency (90, 120, and 180) depends on your mortgage servicer.

The trustee sends a “Notice of Trustee’s Sale,” setting a sale date no sooner than 91 days after the notice of trustee’s sale is recorded. The trustee must send by certified mail a copy of this notice within five days after recording. No further notice is required. However, in addition to mailing the Notice of Trustee’s Sale, the trustee must post the home with the Notice of Trustee’s Sale and post it at the superior court at least 20 days prior to sale (this could be right after the Notice of Trustee’s Sale is filed). The trustee must also publish the Notice of Trustee’s Sale in a newspaper for 4 consecutive weeks with the last date of publication not less than ten days prior to sale.

Should you receive the Notice of Default/Auction Letter, contact your servicer immediately to determine if you qualify for solutions to prevent foreclosure. Additionally, HUD Approved Non-profit Housing Counseling Agency Counselors can assist you with free foreclosure prevention counseling.

CALL YOUR MORTGAGE COMPANY/SERVICER IF YOU KNOW YOU’LL BE LATE AND ALWAYS RETURN THEIR CALLS!!

Let’s work together!

Derek O’Toole

Helping Hands Solution AZ