It would be a shame to lose a house that only has 7 years left on the loan. My advice would be to NOT LET THIS HAPPEN no matter what you have to do to stop it....Get an extra job, sacrifice other bills just so that you can get this loan paid. A mortgage company in this economy will not foreclose on your home with one or two payments behind (generally speaking). But if you get 3 behind, you are in danger and will receive the dreaded default letter telling you that they must have a certain amount of money by a certain date or else they will start foreclosure proceedings. IF you pay JUST ONE of the payments owed, it will stop this process until you are 3 payments behind again. But what you don't want to do is to go beyond the 3 month limit. Once you are 3 months behind AND owe the 4th month, you are in real trouble that will be hard to recover from before they foreclose.
If you want to keep the house, pay the past-due payments and try to get it current if possible...even if it's by paying a payment now and another one in 2 weeks, etc. Don't lose your house when it's so close to being paid. BUT, if you want to sell and get out from under it and you don't mind a credit score hit for 3 years, you can do a short sale by listing with a good REALTOR who knows how to market and work a short sale. The debt can be recorded as "settled" rather than a FORECLOSURE and you will be free of the debt.
I am certified foreclosure and short sale resource and affordable housing specialist and I can help you with this short sale. If you are interested, please contact me at email@example.com or 214-918-1686 and I will be happy to go over the details with you.
Coldwell Banker APEX