Foreclosure is a process, usually after you have missed 3 payments (the third payment is considered late after that month has past so it is really the 4th month) a default notice or foreclosure law suit is filed.
You need to avoid foreclosure it is a life changing event, there are many programs out there to help people having trouble making their payments so get proactive and call your bank now.
What you should do is start talking with your bank about a modification they are mandated by the government to work with people having trouble with their mortgages.
They may suggest you consider a short sale be careful short sale is a form of foreclosure and carries negative credit ramification like foreclosure, so make short sale a last resort.
See the ramifications of short sale and foreclosure below.
If you really want to avoid any form of foreclosure and save your home you need to get serious, it will take a lot of time, energy and you will get frustrated but the results will be worth it. You need to start to be proactive instead of reactive, you need to start a dialog with your lender and you need to document everything you do. It may not seem like it but banks do not want to foreclose and the government has stepped in offering a few different modification packages to the banks. When you call you will be on hold forever (document it), you will need to ask to speek with supervisors, and even administrators (document names and numbers), and you will repeated send documents that will get lost in the shuffle (make copies). In most cases your lender no longer owns your loan ask who owns it and start communicating directly with them instead of a middle man. Try try and try again, I have had foreclosure sales pushed off as many 6 times in one case, twice at 4:00 the day before the auction date. If the bank does start the foreclosure process which they will even if you are working on a solution (it is called covering their A**) you need to show up in court and show the judge proof that you are being proactive and the bank is not cooperating with all that documentation you have accumulated. Judges do no like uncooperative banks.
Modifications very but you should be able to lower your payment by 1/3, have past due amounts and charges eliminated, and/or your interest rate reduced. Most modifications will have a 3 month trial periods prior to making the changes permanent.
Ramifications of Foreclosure, Short Sale or Deed-in-lieu-of-foreclosure
Here are some of the ramifications of foreclosure, short sale or deed-in-lieu-of-foreclosure, there are many more like your job, yes employers are checking credit records these days.
Your credit score will be reduced by 200-400 points, short sale a little less 100-200 points.
All forms of foreclosure stay on your credit report for 10 years.
After you have gone through foreclosure, short sale or deed-in-lieu-of-foreclosure there will be what is known as the "waiting period", this period of time varies for each and can be reduced if you had some type of extenuating circumstances that caused the foreclosure:
Waiting Periods to Buy After Foreclosure
* Buying After a Foreclosure
The waiting period is 5 years up to 7 years.
* Buying After a Foreclosure with Extenuating Circumstances
The waiting period is 3 years up to 7 years.
* Buying After a Deed-in-Lieu of Foreclosure
The waiting period is 4 years up to 7 years.
* Buying After a Deed-in-Lieu of Foreclosure with Extenuating Circumstances
The waiting period is 2 years up to 7 years.
* Buying After a Short Sale
The waiting period was just upped from 2 to 3 years. However, if a seller does not have a 60-day late pay, that seller may immediately buy another home. It's a reason to stay current on your payments while the home is on the market as a short sale.
In addition to the waiting period, most loans require a minimum down payment of 10% and a minimum FICO score of 680. The home purchase must also be the principal place of residence, not a rental nor a vacation home.
Lastly, most loan applications will ask the dreaded question "Have you ever been foreclosed on?" this stays with you for life, many think that because it will not show up on the credit report after 10 years they can answer "no", well lying on a loan application is a felony that carries a major jail term, so be aware.