The clock starts running when the homeowner’s mortgage payment becomes 16 days late.  At this time the bank will attempt to contact the homeowner and try to find a way to get current on the payment.  Once this 1^st missed payment reaches it’s 30^th day being late, and if the bank feels it won’t be getting the next month’s payment either the bank will become more earnest in it’s attempts to collect.  Day 90 will see the bank contacting it’s attorneys and the official foreclosure process will begin. It is during this first month or three that the bank will most like offer the homeowner a few options to fix the situation: A repayment plan, or a home loan modification.

Repayment plan.  The bank will offer to spread the amount of the 1^st missed payment over the following two or three.  This can give the homeowner a little room to maneuver in, allowing them to catch up with the payments, especially if they were late to begin with due to a large unexpected bill or expense.  Sometimes, people just miss a payment or two because a car broke down, or there was an emergency.  Banks know these things happen.

Home loan modification.  This is a more extreme solution for the homeowners who can’t afford and can’t meet the requirements of a repayment plan.  A home loan modification is when the bank changes the loan’s terms to make it more affordable to the homeowner.  The modification may include one or more of the following:

A lower interest rate

A change in rate from variable to fixed

An extension of the duration of the mortgage

A lowering of the actual principal

When negotiating with the bank for a home loan modification it can be a good idea to consult a loan modification specialist.

If a home loan modification doesn’t work, the bank may allow the homeowner to perform what is called a short sale.  The is when the bank allows the homeowner to sell the house for less then the amount owed, accepts the money from the sale, and waives the remainder of the amount owed.  A bank will do this because it stands to lose more owning a house it may not be able to sell right away.

To learn more about home loan modification visit Legal Loan Bailout.