"Pre-foreclosure" sounds like the house is about to be sold tomorrow.

That's not necessarily what it means.

There's an important difference between:

  • Being late on a mortgage.
  • Being seriously delinquent.
  • Having formal foreclosure proceedings initiated.
  • Receiving a notice of sale.
  • And actually losing the property through foreclosure.

Missing One Payment Doesn't Mean Foreclosure Starts Immediately

Mortgage delinquency begins when a borrower fails to make a required payment.

However, for mortgages covered by federal servicing rules, a servicer generally cannot make the first foreclosure notice or filing until the mortgage is more than 120 days delinquent, subject to limited exceptions.

That time is important.

If you're struggling, use it.

What Does "Pre-Foreclosure" Mean?

"Pre-foreclosure" is commonly used to describe the period after serious mortgage delinquency and before a foreclosure sale is completed.

Exactly what appears in public property records depends on the state and foreclosure process.

A Property DNA Report may identify foreclosure-related information where available.

That doesn't necessarily mean the property will ultimately be foreclosed.

Borrowers May Still Have Options

If you're behind on your mortgage, don't automatically assume foreclosure is inevitable.

Mortgage servicers may offer loss-mitigation alternatives.

Depending on the loan and circumstances, those may include:

  • Repayment plans
  • Forbearance
  • Loan modifications
  • Payment deferrals
  • Short sales
  • Deeds in lieu of foreclosure
  • Other workout programs

A loan modification changes one or more terms of the existing mortgage in an effort to make the obligation manageable.

The CFPB specifically recommends contacting the servicer and applying for available loss-mitigation options rather than simply ignoring the delinquency.

A Foreclosure Filing Doesn't Mean the Sale Will Definitely Happen

A borrower may bring the loan current.

A modification may be approved.

A repayment agreement may be reached.

The home may be sold.

A short sale may occur.

Another resolution may stop the foreclosure.

That's why foreclosure-related information tells you something important — but doesn't necessarily tell you how the story ends.

Eventually the Timeline Becomes Much More Serious

Once the process progresses toward an actual scheduled foreclosure sale, time becomes extremely important.

If you're the homeowner, get help.

If you're the listing agent, involve title immediately.

If you're the buyer, understand that completing the transaction before the foreclosure sale may require a highly coordinated closing.

Selling May Preserve Equity

This is something we wish more homeowners understood.

Having a foreclosure started doesn't necessarily mean the only option is losing the house.

If the property's value exceeds the mortgage and other obligations, selling may allow the homeowner to:

  • Pay the mortgage.
  • Resolve other liens.
  • Preserve remaining equity.
  • And avoid completion of the foreclosure.

Even when there isn't enough equity, lender-approved options such as a short sale may sometimes be available.

Please Don't Just Do Nothing

Financial trouble can be overwhelming.

But ignoring letters and calls doesn't stop foreclosure.

Call the servicer.

Ask about loss mitigation.

Talk to a HUD-approved housing counselor.

Speak with a qualified real estate professional if selling may make sense.

And involve a title company early if you're considering a sale.

Pre-foreclosure is a warning.

It isn't necessarily the end of the story.

Foreclosure laws and timelines vary by state and loan. This article provides general educational information and is not legal or financial advice.