Foreclosure??

Question

we are currently having trouble paying the mortage, and were thinking about just walking away from it. We are going to try to seel first, but w the market i dont think we will. Whatis the true consequence of a foreclosure on your record today?

Answer 1

A foreclosure will stay on your credit report for seven years.  It's a very big red mark and, according to some, is equivalent to bankruptcy (others consider it worse).

Other consequences are that you might be in legal trouble as well if the bank sell it for less than what they loaned you.  If they decide to forgive that amount, you're still on the hook since the IRS will treat it as income and the IRS is one of the worst collections agencies (they can tap your bank account, garnish wages, etc).

If you're having trouble paying, call the bank ASAP.  They may be more willing to work things out since they dislike foreclosures, too.  Make sure you speak to their Loss Mitigation dept.  They might even give you extra time to sell the place or even settle for a short sale (take less money than you owe).  Regardless, they can only provide these options if you speak to them.  Walking away is by far the worst thing you can do.

I sincerely wish you the best of luck with all of this and hope everything works in your favor.

Answer 2

You should contact the Loss Mitigation Department of your  lender.

Explain to them your problems you are having. They might have a solution where you can stay in the house through a program they might have.

If you do continue to foreclosure most lenders use what is called a non-judicial foreclosure procedure. Under this procedure it takes approximately 120 days to complete.

The procedure starts when the lender decides to issue a "Notice of Default" This is saying that you are now in foreclosure and have 90 days in which to refinance make up the back payments and bring the mortgage current.

Failure to bring the mortgage current or refinance during this period the lender then decide to issue a "Notice of Sale"

The "Notice of Sale" gives you twenty days to refinance or sell the house. Normally the lender will not entertain a refinace with them during this phase. Some will some won't.

Each lender has their own policy as to when to issue the "Notice of Default" and the "Notice of Sale" Some will not issue the "Notice of Default for several months, while others will issue after being late only once or twice.

Non-judicial foreclosures are used by most lenders because they can legally and immediately get rid of the property at a foreclosure sale. If the property fail to be purchased by someone else the lender then become the legal owner of the property.

If the property is sold the new owner takes possession of the property after all the legal paper work is completed. If the property does not sell the lender takes possession of the property after all the legal paper work is completed

This procedure is used because the current owner does not have a right to redeem the property, but on the other hand the lender can not issue a judgement against the owner.

Under the judicial foreclosure procedure the lender normally have the right for a judgement against the current owner of the property if is sells for less than is valued, but on the other hand the current owner has the right of redeemption of the property for a certain period normally one year.

Since the lender don't want to hold the property for a year they normally use the non-judicial foreclosure procedure.

Answer 3

This is definitely an option,  I actually was just reading into that and found a website where that was listed as an option...   you may want to check this site out.. http://www.loosingmyhouse.com

Answer 4

A foreclosure / repossession is the absolute worst thing that can show up on your credit.  It will disqualify you for any loan considerations for a long, long time.  All lenders are different some will not make any loan for a person who has a repossession as much as ten years after the fact.  In addition, you may be left with a judgment on your credit if there is an outstanding balance on your home loan after the lender sells the house.  I know of no states which prohibit lenders from doing this on home foreclosures.  They sell the house, and if by some miracle they get more for it than what you owe, you get the surplus, and still have a repossession on your credit.  99.9999999% of the time, they sell the house, and there is a shortage, for which you are still responsible.  If the procedure of sell takes a few months, then the recovery paperwork takes longer, you could be in a jam for longer, since the credit "clock" starts ticking when the collectors start filing paperwork.  

Further, depending on which state you live in, a creditor can sometimes be allowed to garnish your wages in the future for the shortage (Texas does not allow this, it's probably the friendliest state in these terms...) So you may find yourself with no home, and no way to get into a home for a long, long, time....

I suppose I should also say this:  The real answer to your question ultimately boils down to the reason that you wish to walk away, and the degree to which a default would bother you for the rest of your life.

Simply put, if you have a medical issue, or lost your job, or something like this, then I don't think anyone can blame you for letting your debts go - as long as it is the last resort.  If this is the case, let it go, don't try fighting a battle you can't win.  But don't let yourself believe that once you walk away it will it will all be over.

Meanhwhile, if you are just tired of paying, or if you think you have any hope in the future of making the payments (more money, etc..) then for your own good I strongly urge you to find another solution.

Consider refinancing the loan.  You may be surprised to know that your creditor may be willing to adjust the financing terms to better fit your immediate problems.  Or selling the house may take longer, but it is obviously a better option.  Late payments, aren't good, but they are much less harmful to you long-term than a foreclosure...Be honest with yourself, can you cut some corners?  Do you really NEED cable, etc...?  If you make as many sacrifices as possible now, and somehow get through this problem (IF it is temporary), then you will benefit greatly in the future, and I don't think there is any doubt that you will feel much better about yourself in the future...  

Good Luck, I hope you can sell the house.  It's rough when everyone is trying to sell in a down market.  If you can hang in there a year or two, you'll likely get most of the value back in your real estate (no promises) and will have weathered the storm to your benefit....

Answer 5

Foreclosure does a lot of damage to your credit score. On your future mortgage application you have to report that you had lost a home in foreclosure. It will limit your chances of getting a new loan for nearly 7 yrs.

So better try short sale, as I had read in an article that banks while evaluating a borrower who had a short sale or foreclosure in his past would probably give slight edge to the short sale.

Answer 6

Call your mortgage company.  They might work out a plan with you for lower payments.  These companies do not want everyone's houses.  I am working with my mortgage co. now and have all been very friendly.  

If it comes down to it, you can do a Deed in Lieu which looks somewhat better on your credit report and it shows good faith.  It shows you didn't just walk away, you tried to work with your mortgage company.  I know how hard and stressful this all is.

Answer 7

It's worth trying to avoid foreclosure, if possible.

There's a terrific article at eHow on steps you can take to avoid foreclosure:

http://www.ehow.com/how_2256426_foreclos...

How to Avoid Foreclosure During the Subprime Crisis

Read through it carefully, follow the steps outlined, and make full use of the Resource links provided.

If it's not too late, you might to look at this one, as well, on renegotiating your mortgage with your bank:

http://www.ehow.com/video_2277196_renego...

How to Renegotiate Your Mortgage and Lower Your Monthly Payments

Lastly, you might want to check out ways to earn some extra cash

http://www.ehow.com/how_2254361_money-in...

How to make money on the internet, scam-free

Hope that helps.  Best of luck.