Background

Missing two mortgage payments typically means your account is about 60 days delinquent. Lenders prefer loss-mitigation solutions that keep borrowers in their homes rather than move to foreclosure, and since 2008 federal and industry practices have expanded loss-mitigation options (see CFPB, HUD, FHFA). However, timelines and programs differ by servicer and state law.

How it works — practical steps you should take now

  1. Contact your loan servicer immediately. Ask for a loss-mitigation review and explain the hardship in writing. Most problems are solved by early communication. (Consumer Financial Protection Bureau guidance recommends contacting your servicer as soon as you miss a payment.)
  2. Document your hardship. Typical documents: hardship letter, recent pay stubs, bank statements, and recent tax returns.
  3. Evaluate common options:
  • Forbearance: A temporary pause or reduced payment to stop late fees and give breathing room. Forbearance terms and whether interest continues to accrue depend on the servicer and loan type (see your servicer agreement).
  • Repayment plan: You make your current payment plus a portion of the missed amount each month until current.
  • Loan modification: A permanent change to the loan (term, rate, or principal treatment) to lower monthly payments.
  • Short sale, deed-in-lieu, bankruptcy: Considered when loss mitigation isn’t feasible; these have long-term credit and tax consequences.

Real-world example (in my practice)

A client lost hours at work and missed two payments. After calling the servicer and submitting proof of unemployment, we got a 90-day forbearance. During that time she found part-time work and converted the forbearance into a short-term repayment plan that spread the missed balance over 12 months. Early outreach preserved her credit profile and avoided foreclosure.

Who is affected / who is typically eligible

Homeowners with recent job loss, reduced income, medical bills, or other unexpected expenses are the most likely to seek relief. Eligibility varies by loan type (FHA, VA, conventional) and by servicer; federal agencies (HUD, FHFA) and the CFPB offer borrower guides to specific programs and protections.

Pros and cons (quick comparison)

Option What it does Typical pro Typical con
Forbearance Temporarily reduce or suspend payments Immediate short-term relief Missed interest may capitalize or become due later
Repayment plan Spreads missed payments over time Keeps loan current sooner Higher monthly payment until caught up
Loan modification Changes loan terms permanently Lower monthly payment long term Can require documentation and affect payoff or credit reporting

(For more on how forbearance affects interest and balance, see our article on what a forbearance agreement should include.)

What lenders typically require to approve relief

Lenders usually ask for a hardship letter, proof of income or unemployment, bank statements, and recent tax returns. Expect at least a few weeks for a formal review. If denied, ask for a written reason and ask how to appeal.

Credit and reporting — what to expect

A missed payment is generally reported to credit bureaus after 30 days delinquent. Some servicers report accounts as current while in approved forbearance; others report missed payments then note the forbearance—practices vary. The CFPB explains how servicers should communicate credit reporting during hardship reviews.

Professional tips and strategies

  • Act immediately: early contact keeps options open.
  • Put requests in writing and keep copies of all correspondence and documentation.
  • Ask whether interest will accrue during forbearance and how the missed amounts will be repaid (lump sum, added to end of loan, or spread out).
  • If your servicer is unhelpful, escalate to a supervisor or file a CFPB complaint. Consider consulting a HUD-approved housing counselor for free advice.

When to get professional help or consider alternatives

If your servicer denies loss mitigation or you receive a foreclosure notice, contact a HUD-approved housing counselor or an attorney experienced in mortgage workouts. Bankruptcy or sale may be options, but they carry long-term consequences and should be a last resort.

Resources

Internal articles to read next:

Professional disclaimer: This article is educational and does not replace personalized legal, tax, or financial advice. For guidance tailored to your situation, consult a licensed mortgage professional, housing counselor, or attorney.