NDSU Extension Service - Ramsey County


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What Happens If I Default?


What Happens If I Default?

If you don’t pay your mortgage on time or if your payment is for less than the amount that’s due, you’re in default on your loan. The consequences of default can be costly.

The Federal Trade Commission (FTC), the nation’s consumer protection agency, reminds us it is important to understand the costs of default. The agency also stresses that if you’re having trouble making your mortgage payments, contact your loan servicer to discuss your options as soon as you can. The longer you wait to call, the fewer options you have.

What happens if I default on my mortgage?

Defaulting on your mortgage can add the cost of various fees to the amount you already owe If your payment is late, you may be charged a late fee. Late fees can add hundreds of dollars to your mortgage bill. It also can damage your credit score. Ultimately, it can lead to you losing your home..

Default-Related Fees.

Your mortgage servicer is the company that manages your mortgage loan account. If you’re in default, your servicer may charge you for "default-related services," which can add hundreds or thousands of dollars to your loan over time. Default-related services can include:


  • Property inspections to make sure you are living in the home and maintaining the property.



  • Property preservation services, including lawn mowing, landscaping and repairing or boarding up broken windows and doors.



  • Foreclosure costs, which may include attorneys fees, property title search fees and charges for mailing and posting foreclosure notices.


Damage to Your Credit Score.

Mortgage servicers provide information about your payment history to credit reporting companies, including whether you’ve been late with a payment or missed any payments. Even one late payment lowers your credit score, which affects whether you can get a loan in the future – and what your interest rate will be.


If you are in default, your servicer may start the foreclosure process. Not only will this add to the costs you will have to pay to bring your account current, but the foreclosure filing will be a matter of public record. This will make it tougher for you to get credit and buy another home in the future. If you aren’t able to bring your loan current or work out another solution, your home could be sold at a foreclosure auction. In many states, you also may be responsible for paying a "deficiency judgment." That’s the difference between what you owe and the price the home sells for at the foreclosure auction.

Where can I get help?

If you are struggling to make your mortgage payments or you’re in default, contact your mortgage servicer right away. Keeping the lines of communication open is critical to resolving issues with your loan. Options to help you bring your mortgage loan current and save your home from foreclosure include loan modifications, repayment plans, or a temporary reduction or suspension of payments. If you’re not eligible for any of these options, your servicer may be able to help you find a solution other than foreclosure, like a short sale or a voluntary transfer of the property through a "deed in lieu of foreclosure."

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