In most cases, a mortgage servicer can't start a foreclosure until the borrower is more than 120 days overdue on the loan. Though, under some circumstances, the process might start sooner.
Federal law generally prohibits the servicer from making the "first notice or filing" to start a judicial foreclosure or nonjudicial foreclosure until a borrower's mortgage loan obligation is more than 120 days delinquent. (12 C.F.R. § 1024.41).
Your state's foreclosure procedures determine which document is considered the first foreclosure notice or filing.
A document that you get as part of the foreclosure process—but that isn't initially required to be filed, recorded, or published—isn't considered the first notice or filing even if the servicer later includes the document as an attachment along with another document that's filed, recorded, or published as part of the foreclosure.
The 120-day time frame gives you time to work out a way to avoid foreclosure. If you apply for a loss mitigation option during this time, the foreclosure start date might get pushed out even further. (To learn more about federal laws that protect homeowners in the foreclosure process, see Federal Laws Protecting Homeowners: Foreclosure Protections.)
Even if you're more than 120 days delinquent, if you submit a complete loss mitigation application before the servicer makes the first notice or filing required to initiate a foreclosure process, the servicer can't start the foreclosure process unless:
To learn more about how foreclosure works in your state, see our Key Aspects of State Foreclosure Law: 50-State Chart.
The 120-day rule applies to mortgage loans that are secured by a property that is the borrower's principal residence. (12 C.F.R. § 1024.30). Though, whether the property is considered the borrower's principal residence depends on the specific facts and circumstances regarding the property and applicable state law. For example, a vacant property might still be a borrower's principal residence under some circumstances, like when a servicemember relocates due to a permanent change of station orders and was living at the property as a principal residence immediately prior to displacement, intends to return to the property at some time in the future, and doesn't own any other residential property.
While small servicers are exempt from some of the requirements under federal mortgage servicing laws, they must adhere to the 120-day rule, assuming the property and loan meet the other criteria. The 120-day law applies to both first lien and subordinate lien federally related mortgage loans, although it expressly doesn't apply to open-end lines of credit (home equity plans), reverse mortgages, and some other types of exempt loans, like loans for which the servicer is a qualified lender under the Farm Credit Act of 1971. (12 C.F.R. § 1024.31, 12 C.F.R. § 1024.30).
The 120-day required delay on starting a foreclosure also generally applies in the case of a non-monetary breach of the loan contract, like:
The 120-day rule doesn't apply in the following situations:
If you think that your mortgage servicer has improperly started a foreclosure during the 120-day preforeclosure period, consider talking to a local foreclosure attorney. You might be able to stop the foreclosure, at least temporarily, which could buy you some time to work out an alternative, like a loan modification.
To find out how to apply for a loss mitigation option, call your servicer. If you need more information about different ways to avoid foreclosure, consider contacting a HUD-approved housing counselor.