Bills Logo Team
UpdatedNov 17, 2010
Key Takeaways:
  • Your mother will be evicted if she fails to pay the mortgage.
  • Your mother has options to avoid foreclosure.

What happens if you can't pay your mortgage?

My parents lived in their home for many years. It was paid off. Several years ago, they took out an equity loan to start a business and help pay for college for my sisters and I as well as my wedding. My father recently passed away from cancer leaving large unpaid medical bills. My mother is currently unable to continue paying on the home as my father ran the business and it is a complete mess right now. My mother has attempted to refinance, but because the equity loan is much higher than the current home value, her efforts were unsuccessful. She cannot afford to single handedly pay the monthly payment as all my parent's savings were drained on medical expenses and her monthly income currently is below $600. This is the first month she has not made a payment on her home. What will happen? What can my mother expect?

If the mortgagor (the borrower) defaults (fails to make the monthly mortgage payments), the mortgagee (the lender) may reach the land to satisfy the debt. In some states this is accomplished with a a judicial foreclosure. This is a lawsuit in which the mortgagor is evicted and the property is sold under the supervision of a government official, such as a sheriff. A judicial foreclosure can start 120 to 180 days following a default.

In some states a foreclosure is accomplished privately. If the mortgage is actually a deed of trust, a deed of trust allows the trustee to sell the property in a private sale when the borrower defaults. The private sale must occur in a commercially reasonable manner so as to bring the highest price possible. A private sale may occur as soon as 60 days following a default.

Can't Pay Mortgage

Your mother will be evicted if she continues to fail to pay the mortgage, the house will be auctioned or added as a real-estate-owned (REO) property in the multiple listing service. When the house is sold, the proceeds will be applied to the balance of the loan. Any surplus will be given to your mother. If the sale proceeds are less than the balance of the loan, then she will be liable for the deficiency balance. If your mother's home is worth more than the balance of the mortgage, then she should sell the property herself immediately.

Your mother has options to avoid foreclosure. Read the resource Home Affordable Foreclosure Alternatives Program to learn about the options she has to resolve the mortgage with the mortgagee.

I hope this information helps you Find. Learn & Save.




CChasity, Aug, 2011
Our house is only in my husbands name as he purchased it before we were married. We owe $108,000 on the house and it would probably be appraised for just under $100,000. We have a 2nd mortgage as well, and that is $16,000. We are 1 month behind on our regular mortgage and current on our 2nd. There are multiple houses in our neighborhood that have been on the market for 6+ months and have received no offers. We want out of this house as we can no longer afford it as my husbands income has taken a hit. We can no longer afford to live in this house and want out as soon as possible. What first steps should we take?
BBill, Aug, 2011
The first steps you should take are to speak to your mortgage holders. See if you can either work out a loan modification or if you can do an FHA Short Refinance.

If you can't work out anything, either contact a lawyer or an organization like NACA that helps people in situations like this.
VVA, Jan, 2011
Hi, I am from VA, need some help with your opinion. I have 2 loans, 80 and 20 on my home. My home is way under water. Hence got the 1st mortgage modified and I am current with them. I stopped paying 2nd since I thought it is foolish to pay for a home which has lost 30% value. I got few calls from 2nd, I answered all of them and I told them I wanted some relief and settlement, even left messages to their loss mitigation, they didnot returned the call. I told them my house is under water. They stopped calling me. I have not paid the 2nd for the last 4 months. Recently I checked my Credit report, I noted the account is closed, but it says ""Credit grantor reclaim collateral to settle defaulted Mortgage", but the balance is still due?..I am not sure what this means since I have not received any notice of foreclosure from 1 st or 2nd and I am still staying in the house. Please need your advice.