It normally takes almost a year for a bank to foreclose. Nothing really happens if you are only two payments behind. Are there family members who can help come up with the two payments to get the mortgage current? Also, they could file Bankruptcy Reorganization (I forget which # it is but it's not the full bankruptcy). It's designed to give you time to get back on your feet and forces your creditors (like the mortgage company) to work out a payment plan. I wouldn't lose that amount of equity for $5,000 in back payments.
Do they have two homes? And while it's none of my business, why have they taken out second and third mortages and now owe over $400,000 on a house they bought over thirty years ago for $26,000? It should have been paid off by now. Only reason I'm asking is there may be money management issues that won't go away if you get them caught up on payments. I would get them caught up and then drop the sale price of the home substantially in order to get it sold.
I feel for you. I watched my mother and stepfather go through the same thing. Problem was they couldn't/wouldn't stop spending money on junk and anything their daughter wanted. My (much younger) half sister kept buying cars on credit and then wouldn't make any payments and they had cosigned so they would take out another mortgage to pay off the car. Next month it would be a health club membership the next month a huge cell phone bill, a wedding, a trailer for them to live in, on and on. It went on for years - still going on eventhough they lost their big old farm home - luckily they were able to sell it at the last minute, after dropping the price. They were almost two years behind on the payments.
