Common Questions about the Foreclosure Process

When can a lender start the foreclosure process?
This is really dependent on your particular mortgage. If you are unsure, please refer back to your mortgage documents. However, with most mortgages and deed of trust, the process starts 120-150 days after first delinquent payment.

How badly does a foreclosure hurt your credit score?
A foreclosure can take a heavy toll on your credit report. The item would likely show twice on your credit report, once on your trade line and again in the public records section. The trade line entry would reflect as negative data for 7 years, plus 180 days from the last time the account was paid on time. The public record would have an independent opening date (the date the foreclosure was filed at the courthouse) and would show for 7 years from that date.

How long after a foreclosure can you stay in the home?
You will be asked to leave immediately. One of the rights lost in a foreclosure is that of possession.

Can you protect other assets during a foreclosure?
Foreclosure only affects the specific property that is listed in the mortgage. If you have other assets they are not in jeopardy during foreclosure. On the other hand, a lending institution may file a lawsuit to obtain the remaining money. By law, a lender may seek whatever means available to recover the money they lend to you. The bank will complete foreclosure to retain the property. A homeowner is given the opportunity to remove their personal property before foreclosure. However, if you wait too long they will dispose of your personal property in a way that is most efficient for them.

Can you save your home after foreclosure proceedings have begun?
More than likely you cannot save your home once the actual proceedings have begun. This is why most lenders give a homeowner 120 days to come current. Once the process starts, the loan must be paid off in full.

How long do I have to stop foreclosure?
Time is definitely not your friend in this situation. The more time that you spend ignoring your situation, the more likely you are to miss out on the opportunity to correct the situation. Stopping foreclosure can take anywhere from a few days to many weeks depending on your state laws and the method of foreclosure your lender implements.

How do lenders start the foreclosure process?
In states that use mortgages to prove property ownership, the lender must file a court case to prove there was a default on payments. This is known as a judicial procedure. Some states use a deed of trust to secure a loan. In those states a Notice of Default is recorded in the public record. Recording the NOD signals the official start to the foreclosure process.

Can you refinance out of a foreclosure if you have no equity?
This would be nearly impossible. With the loan in foreclosure, the homeowners' credit is typically very low. As such, they will not qualify for a traditional mortgage. Many lenders simply refuse to provide a new mortgage when the house is in foreclosure. The lenders that will provide a foreclosure bailout loan do so based on the equity and income. Usually the home must be 65-70% loan-to-value to qualify for a loan. Rates are typically high (11%-20% depending on the lender). The homeowners will need to show enough income to qualify for such a payment. All of this leads to a death spiral and almost no chance to refinance out of the situation. This is why it essential to contact your lender or another private lender prior to the start of foreclosure proceedings.

What are the benefits of a short sale?
A short sale can relieve the stress of being in foreclosure. A short sale will allow homeowners to get rid of their mortgage payment and move on with their lives. A short sale has the additional benefit of being free to the homeowner. A short sale also prevents additional damage to your credit. Having some late payments and a foreclosure filed has already done damage to your credit. A completed foreclosure will do significant damage, ultimately lowering your credit score. A short sale results in the mortgage being paid off, which compared to a foreclosure can be seen as a positive.

Can a short sale save your house?
Sadly, the answer is no. The very nature of a short sale is that the property is sold and proceeds used to pay the agreed upon balance of the mortgage. A short sale will not save your home. A short sale will help you avoid foreclosure which can assist in saving your credit and a lot of stress and anxiety. For help with arranging a short sale, please contact one of our network of experts.

How do I get my credit report?
You can contact the two main credit bureaus and ask them to send you your credit report. The two credit bureaus are: Equifax and Experian.

Which items can cause the most damage to my credit report?
There are typically eight items that can have the most negative impact on your credit report. Some common examples are late payments, defaults (paid/unpaid), CCJ's, bankruptcies, multiple credit hits, foreclosure and repossession orders. We highly recommend contacting one of our credit repair experts for additional detail. To speak with a credit repair expert, please click here.