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What Is Mortgage Delinquency?

January 30, 2024 4-minute read

Author: Scott Steinberg


What is mortgage delinquency, and how might it impact your home loan and credit score? It’s an important question to ask, noting the potential detrimental effects that it can have on your payment history and credit rating.

Sometimes hardships occur and being late on payments may be unavoidable. Here, we take a closer look at what it means to be delinquent on a mortgage, its consequences, and how to work with servicer to create a plan moving forward. It’s important to note that a servicer is responsible for collecting your monthly mortgage payment and may or may not be the same as your original lender.

Mortgage Delinquency, Defined

Mortgage delinquency is a real estate term that refers to when homeowners are at least 30 days overdue on making at least one mortgage payment. Consequences for mortgage delinquency range from late fees to credit impacts and possibly foreclosure on a home.

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What Happens When You’re Delinquent?

Sometimes financial hardships occur, which might lead to late mortgage payments. Financial lenders (i.e. banks, credit unions and online providers) who have issued mortgages will look to work with borrowers to find a practical solution. Such solutions often come in the form of payment plans or loan modifications which help borrowers regain financial liquidity.

In a worst-case scenario, though, mortgage delinquency can lead to foreclosure or home repossession. This is why it’s important to place a call to your lender and work with them to find a mutually agreeable way forward should you experience financial hardship.

For example: Say Bob – an otherwise healthy and employed 60-year-old man – suddenly finds himself let go from his position and unable to make his recurring monthly mortgage payments. His next steps might be to call his lender to seek relief due to extenuating circumstances. If Bob does not call his mortgage lender and work with them to get outstanding balances paid, he runs the risk of late fees, penalties and his property eventually being reclaimed and sold by the lender.

What Are The Solutions For Mortgage Delinquency?

Mortgage default involves late fees, credit score damage and more. Below, you’ll find several paths to resolve the situation.

Modify The Loan

A servicer may offer to modify the mortgage terms for a borrower if they’re behind on monthly payments. They may alter the principal amount owed, interest rate or loan term. Borrowers who currently have an adjustable-rate mortgage (ARM) may be offered a fixed-rate mortgage to avoid further consequences.

Agree To Forbearance

Forbearance is defined as a way to temporarily pause payments on your home mortgage. If you’re dealing with short-term hardships (job loss, disability, etc.), it may be necessary to seek forbearance (a much preferrable alternative when you consider how forbearance compares to foreclosure). Before agreeing to the forbearance, payments missed under the forbearance will eventually have to be repaid at a time that’s mutually agreed on between you and the lender.

List The Home As A Short Sale

A short sale happens when a delinquent borrower (i.e. a homeowner) is approved to sell their home for less than the actual amount that they owe on the mortgage. All proceeds go to the lender, who then either forgives any remaining monies owed or obtains a deficiency judgment, a legal ruling which requires the borrower to pay any remaining amount. Be advised that some states may require borrowers to pay any differences owed by default, though.


Foreclosure is a legal process through which a financial lender will attempt to recover outstanding loan balances from a delinquent borrower by forcing the sale of the home or property used as collateral on the loan. As you might imagine, it’s the most serious consequence for long-term mortgage delinquency – and one that lenders themselves seek to avoid given the time and expense associated.

Typically, foreclosure is only sought under extreme circumstances, such as non-payment of the mortgage or an inability to consistently adhere to the terms of the loan for an extended period of time (e.g. upwards of 12 months).

How Can I Avoid Mortgage Delinquency?

While making your monthly payments on time is the simplest way to avoid mortgage default, sometimes that can’t happen. The following hints, tips and strategies can also help you avoid delinquency.

Make Sure Your Mortgage Is Affordable

Avoiding mortgage delinquency starts by only applying for and agreeing to take on a home mortgage you can afford, noting that you always have the ability to shop around for favorable rates and terms. If you’re concerned about whether or not you can afford any given mortgage at current interest rates, you can start your research by using our mortgage calculator to predetermine the total amount of your monthly mortgage payments.

Budget For Housing Expenses

Often times, homeowners can also fall into mortgage delinquency by failing to adequately budget for other common housing expenses such as homeowners insurance or property taxes. Potential home buyers may wish to calculate their housing expense ratio before accepting a new mortgage.

Consult With Your Lender

Worried that you’re in danger of mortgage delinquency? Be sure to contact your lender as a soon as possible. Consulting with your financial lender early in the process can help you establish trust, build goodwill and ultimately help you avoid serious consequences of defaulting on a home loan, including, but not limited to, foreclosure.

The Bottom Line: On-Time Payments Are Key To Avoiding Mortgage Delinquency

To summarize, mortgage delinquency occurs when you’re late on one or more monthly payments.

While initial penalties can include late fees and dings to your credit score, more serious penalties may include foreclosure and the loss of your home.

It’s important to keep an open dialogue with your lender or servicer, who can work with you to come up with a plan if you’re experiencing financial hardship.

Readers seeking mortgage help or temporary relief from debt obligations can find out more by consulting our guide to options for getting help with your monthly mortgage payments.

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Scott Steinberg

Hailed as The Master of Innovation by Fortune magazine, and World’s Leading Business Strategist, award-winning professional speaker Scott Steinberg is among today’s best-known trends experts and futurists. A strategic adviser to four-star generals and a who’s-who of Fortune 500s, he’s the bestselling author of 14 books including Make Change Work for You and FAST >> FORWARD. The CEO of BIZDEV: The Intl. Association for Business Development and Strategic Planning™, his website is