When times grow tight -- maybe due to a job loss or an unexpected medical expense -- making your mortgage payment actually becomes less urgent than paying other bills.
Yes, you need food, clothing, and shelter, but skipping one mortgage payment actually has less immediate consequences than not paying other bills. Basically, if it comes down to being able to eat or making the monthly payment to your mortgage lender, eating wins out every time.
That's a decision made based on immediate survival, and it's not an incorrect decision because you can recover from a missed mortgage payment, but there's no coming back from starvation. Not paying this important bill, however, does have consequences.
What happens if you miss a mortgage payment?
On the positive side, not making one mortgage payment and falling a single month behind will almost certainly not trigger a foreclosure. For that to happen, you will generally have to fall at least two months behind while also failing to communicate with your lender.
That does not mean that a single missed payment won't trigger some negative things. In general, not paying your mortgage will be reported by your lender to the three major credit bureaus and they will lower your credit score. In addition, after a grace period (generally a week to 15 days after the payment due date), a late fee will be added on to the payment you failed to make.
What should you do if you can't pay?
While none of that seems all that bad if you think it's going to be a one-time thing, it's still best to communicate with your lender. In some cases banks are willing to work with consumers who get in front of the problem.
"The worst thing consumers can do is disregard the issue entirely and believe they can start making payments on their delinquent account once they start earning a salary," Leslie Tayne, an attorney specializing in debt relief told MainStreet.com.
In addition to some lenders being willing to offer informal forgiveness or being willing to hold off on late fees or reporting to credit agencies, in some cases people can qualify for forbearance programs. These are formal programs where people facing financial problems can miss a payment or make a lower payment for a period of time while they sort out financial problems.
Not all banks or lenders will be forgiving. Many will be, however, as working with a struggling customer who has a good track record of paying on time tends to keep things from escalating to foreclosure (which is a losing situation for the lender and the homeowner).
Is help out there?
In some markets there are local programs that help people with specific financial difficulties make their mortgage payments. Nationally there are also programs under the Department of Housing and Urban Development that can help.
"The biggest of these programs, the Home Affordable Modification Program (HAMP), may help you lower your monthly mortgage payments," the Federal Trade Commission (FTC) posted on its website. "Other programs can offer options if home ownership is no longer affordable or desirable for you, you're unemployed, or you owe more on your mortgage than your home is worth."
Consumers looking to take advantage of one of those programs can call for free to speak with HUD-approved housing counselors at 888-995-4673. Before doing that however, if the expectation is that you will just miss one payment, your first call should be to your bank or lender.
This is a clear case where getting in front of the problem can lessen the damage for the homeowner. It's very important, if you can't make a payment, to communicate with your lender and in many cases doing so can minimize or eliminate any impact. That might involve creating a plan to catch up after you exit your financial crisis, it could mean forbearance, or it might simply be the bank being willing to hold off on reporting you or charging late fees.