This guide covers the frequently asked question is a 120-day mortgage late payment considered foreclosure.  One of the biggest fears for home buyers late on their mortgage payments in the past is the question Is 120 day mortgage late considered foreclosure? I get countless calls throughout the year from mortgage borrowers who were told they could not qualify for government or conventional loans. This is because they were told that any 120-day mortgage late considered foreclosure by other lenders.

I was curious about a borrower who went to a local mortgage broker and was told by the broker that the borrower needed to meet a 3-year waiting period from the date of last activity (DLA).

This was from the date the borrower became current from the 120-day mortgage late. This was in February 2017. The home was since sold and the borrower was ready to purchase a new home. I called the mortgage broker and was told that under HUD Guidelines, a 120-day mortgage late considered foreclosure. I told him absolutely not.

HUD Guidelines on 120-Day Mortgage Late Payments

Nowhere in the HUD 4000.1 FHA Handbook does it state that a 120-day late payment on a mortgage is the same as a foreclosure or housing event? Long story short, I had one of my loan officers take the borrowers’ applications and end up closing on the loan. The answer to whether a 120-day mortgage late is considered Foreclosure is NO. Unless foreclosure proceedings start, HUD does not consider a 120 mortgage late, the same as a foreclosure.

Being Late After 120-Day Mortgage Late Payments Is Not Considered A Housing Event

There is no waiting period after 120-day mortgage late payments to qualify for FHA, VA, USDA, or Conventional loans. If you are told yes when asked If 120-day mortgage is a late considered foreclosure, contact us. If any borrowers are told that a 120-day mortgage late is considered foreclosure, contact us at Gustan Cho Associates, and we can get mortgage approval.

Qualifying For Mortgage With Bad Credit

Like to clarify bad credit mortgage loans. Borrowers can qualify for mortgage loans with prior bad credit.

FHA is the most popular mortgage loan program in the United States for homebuyers with less-than-perfect credit and higher debt-to-income ratios, so we will mainly concentrate on FHA home loans in this blog. The United States Department of Housing And Urban Development (HUD) is the parent of the Federal Housing Administration (FHA). FHA is neither a lender nor has anything to do with originating and funding FHA loans.

FHA is a government organization under HUD whose role is to ensure and guarantee FHA Loans originated and funded by private financial institutions if borrowers default on the FHA loans and the property forecloses.

FHA insures and guarantees lenders of losses due to losses by foreclosures. For the loan to be insurable, lenders need to follow HUD guidelines. Outstanding late payments and charged-off accounts do not have to be paid to qualify for FHA Loans. However, lenders want timely payments in the past 12 months. One or two late payments in the past 12 months are not a deal killer. However, prior bad credit with outstanding collections, charged-off accounts, and late payments in the past 12 months will most likely render an approve/eligible per Automated Underwriting System (AUS).

How Do Mortgage Underwriters View Late Payments

Late Payments can happen among the best of us. Mortgage Underwriters will need a letter of explanation of why mortgage borrowers were late:

• Was it for job loss?
• Was it due to a divorce?
• Was it due to other extenuating circumstances?

Periods of late payments are understandable. Lenders want to see borrowers have re-established credit after periods of bad credit. Special attention is given to the borrower’s payment patterns and behavior in the past 12 months. Past payment history is a good indicator of future payments on borrowers’ new mortgage payments. Borrowers can qualify for FHA Loans with one or two late payments in the past 12 months.

Is 120-Day Mortgage Late Considered Foreclosure: Late Payments After Bankruptcy & Foreclosure

Most lenders will not accept mortgage borrowers with late payments after bankruptcy, foreclosure, or other housing events. Most lenders consider any late payments after bankruptcy or housing event a second-time offender and will not accept anyone with any late payments period.

Late payments after bankruptcy or foreclosure is not a deal killer. I have helped countless borrowers who got automated approval findings after late payments after bankruptcy and foreclosure.

Do people not lose jobs after bankruptcy or foreclosure? People do not get sick and hospitalized after bankruptcy or foreclosure? Do people not get divorced after bankruptcy or foreclosure? Please get in touch with us at Gustan Cho Associates if told by lenders that they cannot accept you due to late payments after bankruptcy and foreclosure or other housing events.

Waiting Period After Loan Modification To Qualify For FHA Home Loans

We will cover a perfect case scenario explaining the answer to Is 120-Day Mortgage Late Considered Foreclosure. After a loan modification, there is a one-year waiting period to qualify for FHA loans. The one-year waiting period is mainly because, under HUD Guidelines, borrowers need 12 months of on-time payments on any mortgage payments to qualify for FHA loans and other mortgages.

The Team at Gustan Cho Associates is available seven days a week, evenings, weekends, and holidays. Gustan Cho Associates has a national reputation for being a one-stop mortgage shop.

Most mortgage borrowers who went through a mortgage loan modification were at one time or another 120 days late on their mortgage payments before modification. Are all the 120-day late payers on their mortgages classified as having gone through foreclosure? Is 120-day mortgage late considered foreclosure?  The answer is NO, IT IS NOT.

Is 120-Day Mortgage Late Considered Foreclosure: Qualifying For Mortgage With Lender With No Overlays

Home buyers who need to qualify for a mortgage with a national mortgage company licensed in multiple states with no lender overlays on government or conventional loans can contact us at Gustan Cho Associates at 800-900-8569 or text us for a faster response. Or email us at gcho@gustancho.com. Gustan Cho Associates has ZERO OVERLAYS on FHA, VA, USDA, and Conventional Loans. Gustan Cho Associates is a correspondent lender on non-QM loans and bank statement loans for self-employed borrowers.

There is no waiting period after foreclosure with non-QM loans. No tax returns are required on bank statements for mortgage loans for self-employed borrowers.

Besides not having any lender overlays on government and conventional loans, Gustan Cho Associates has dozens of non-QM wholesale mortgage lenders. If a mortgage loan program is available in today’s market, you can rest assured that Gustan Cho Associates has it available.