when a borrower is 90 days past due the lender usually files a notice of default which is a public notice submitted to the local court stating that the borrower s mortgage loan is in default borrowers can still try to work with their bank to modify the loan at this point in the process 
if the loan payments are still not made beyond the 90 to 120 day period then the foreclosure process moves forward the bank will eventually seize the home and an auction will be held to sell the home to another buyer the 60 plus delinquency rate is a critical early warning metric for lenders to monitor providing time for the bank to contact the borrower and work out a payment plan to prevent the loan from going into pre foreclosure mortgage loans are sometimes grouped into a pool of loans that make up mortgage backed securities mbs an mbs is sold to investors as a fund in which they earn interest from the mortgage loans unfortunately investors often have no idea whether the loans that comprise the mbs are current meaning that the borrowers are not behind on their payments if the delinquency rate on past due mortgages rises beyond a certain level then the mortgage backed security may experience a shortfall of cash leading to difficulty making the interest payments to investors as a result a re pricing of the loan assets can occur resulting in some investors losing a portion or most of their invested capital special considerationshomeowners are usually at risk of losing their homes in an economic downturn but certain protections were put in place to help homeowners affected by the covid 19 pandemic in 2020 congress passed the coronavirus aid relief and economic security cares act which included a provision that allowed borrowers to skip their mortgage payments for up to a year a process called forbearance it also provided a moratorium on evictions the moratorium on foreclosures and evictions for enterprise backed mortgages including those backed by the u s department of agriculture usda and the federal housing administration fha has been extended several times the forbearance expires on sept 30 2021 the u s centers for disease control and prevention cdc announced a temporary halt on evictions in counties with substantial or high levels of community transmission of covid 19 the mandate was set to expire on oct 3 2021 but a u s supreme court ruling ended this protection on aug 26 2021 by striking down the moratorium below are some of the steps and key portions of your rights under the forbearance program that borrowers can opt into if they re delinquent on their mortgage payments borrowers must contact their lender or bank that issued the mortgage loan and request forbearance borrowers mustn t stop their mortgage payments until they are approved for forbearance from the lender if approved forbearance will cause any of your skipped payments to be added to the end of the loan s term meaning that the length of the loan will increase in other words borrowers still need to make those payments but instead of making the payments in the next few months those payments will be added to the end of the payment schedule for the mortgage the good news is that there are no penalties for delaying the payments as a result of forbearance also the missed payments won t hurt your credit score which is a numeric representation of your creditworthiness and ability to pay back your debt not all mortgage loans qualify the program typically limits approval to mortgages that are backed or funded by government sponsored enterprises gses such as fannie mae or freddie mac as a result it s important to contact your lender to see what type of mortgage you have as mentioned above the emergency measures signed during the covid 19 pandemic affect mortgages backed by agencies such as the usda and the fha example of 60 day mortgage delinquenciesthe mortgage bankers association mba tracks mortgage delinquency rates for the u s economy the mortgage delinquency rate peaked at 8 22 in the second quarter q2 of 2020 but fell to 6 38 within three quarters as of the first quarter q1 of 2021 this was the sharpest decline ever seen in such a short period of time for q1 2021 the earliest stage delinquencies the 30 day and 60 day delinquencies combined dropped to the lowest levels since the inception of the survey in 1979 fha backed mortgage loans had the highest delinquency rate in q1 2021 of all loan types at 14 67 the report notes that while many areas saw improvement from their mid pandemic highs delinquency rates as a whole are still higher than they were pre pandemic 